New housing construction is set to drop significantly over the next few years with housing starts to fall over 20 per cent.
The hardest hit according to the BIS Oxford Economics Building in Australia 2018-2033 report will be high density dwelling construction which will nearly halve over the next two years.
Medium density home construction starts will decline somewhere in the realm of 20 per cent and detached dwellings will fall by around 10 per cent.
Adrian Hart from BIS Oxford spoke to the Australian Financial Review about the slumping forecasts.
“We’re just passing the peak of the residential cycle,” he said.
“Over the next couple of years, this will accelerate.”
“It was investors who drove the upswing, now investors are pulling out of the market.”
According to BIS, while high-rise apartment construction should begin to recover by 2023 they will be overtaken by medium-rise apartments which are needed in established suburban areas to handle population growth and maintain liveability.
Mr Hart told AFR the loss of high-rise construction would hurt the economy.
“It’s just another drag on the economy that we’ll have to ride out for the next couple of years,” he said.
“It’s been the residential market which was the first real positive driver for the economy after the resources bust.”
Home builders look set to find the coming years increasingly challenging to stay afloat after a string of collapses in Melbourne, including Bayside Construct, Project Group and Watersun Homes.