Multi-unit constructions look set to drop by 40 per cent or more in coming years, putting an end to a sustained period of construction upturn.
The Housing Industry Association’s latest National Outlook report says new home building has been on the up since 2012, which is the longest period of upswing since they’ve taken records.
Acting chief economist from HIA, Warwick Temby, said new multi-unit constructions could return to more normal levels by 2018/19.
“Notwithstanding the current uncertainties around the broader economic outlook, especially with the future US policy settings up in the air, HIA is forecasting a measured return to more normal levels of home building activity over the next couple of years,” he said.
The HIA predict new residential building construction to slow over this period to 2018/19 but still remain healthy.
Mr Temby said figures would remain healthy while actual building on the ground stayed strong while the large volume of construction work already commenced continued to be constructed.
“Actual building activity on the ground will not decline in the same way as new starts due to the substantial volume of work under construction that will not be completed until 2018 and into 2019,” he said.
“The recent peak in new home building was unprecedented: an all-time record 229,823 new residential dwellings started building in 2015/16.”
“This record level building has made a major contribution to Australia’s economic growth over the last few years and eased the under-supply of housing for both owner-occupiers and renters that had built up over the previous ten years.”
“Multi-unit building, especially apartments in the eastern states, has driven much of the growth in this cycle and is also forecast to lead the slowdown in new activity over the next couple of years.”
“From their peak of 117,000 in this calendar year, multi-unit commencements are expected to fall by over 40 per cent by 2018/19.”
“A softer landing is forecast for detached homes with 103,000 starts predicted for 2018/19, down nine per cent on the peak this year.”