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03-07-2014, 11:52 PM
Strong growth picture for NSW housing
Michael Bleby
502 words
3 Jul 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Housing commencements in NSW are likely to jump over the 50,000 mark next year – more than double their trough of 22,344 five years ago – as the state takes the lead in the growing residential market, according to forecasts from the Master Builders Association.
The rise in dwelling commencements over the next three years, which will peak at 58,942 in 2015-16, means the increase in housing supply will be sufficient to meet the state's annual underlying population requirement for the first time in more than a decade.
Expectations of interest rates that won't rise until well into 2015 are a key reason for a stronger growth picture in NSW than six years ago, MBA chief executive Wilhelm Harnisch told The Australian Financial Review. "Residential is stronger," he said. "Residential is where the major difference is." NSW benefiting from pent-up demand
The predictions, published ahead of Thursday's release of building approvals for May, show that while NSW growth lagged that of resource-heavy states like WA and Queensland, it is now benefiting from the pent-up demand that was compounded by poor land-release policies, cumbersome development processes and inefficient developer levies.
A further boost to construction in the most populous state will come as demand retail, office, health and aged-care facilities pushes the value of non-residential building to a peak of $12.5 billion by 2016-17, a level last seen in the run-up to the Sydney Olympics, the MBA says. Engineering construction will also get a boost from the state's planned infrastructure spend.
In contrast, Victoria, which has performed better than its northern rival by virtue of low-cost land and more efficient land-release policies, is likely to take a breather. Housing starts in Victoria are likely to peak at 55,655 in 2016-17, the last of the three years in the planning horizon from a likely figure this year (financial year 2015) of 52,459.
"It was always going to be a challenge to maintain strong growth after such a golden period," the report says. "After a correction in residential building, Victoria will do well to maintain the growth momentum."Stronger industrial, retail building work
Likely growth in non-residential building of 10 per cent in past financial year and 11 per cent this year will come from stronger industrial and retail building work. Engineering work will also be boosted by planned infrastructure spending, peaking at just under $15 billion in 2016-17, the report says.
House construction in Queensland is picking up, and provided interest rates remain low, housing starts at a level of 41,644 in 2016-17 will be getting back towards the peak levels of 2007-8, it predicts. Engineering construction will continue to fall.
WA faces a decline in building starts. After sharp growth, the figure likely peaked last year (FY14) at 27,601 and will tick down over the next three years.
Fairfax Media Management Pty Limited
Document AFNR000020140702ea7300011
Michael Bleby
502 words
3 Jul 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Housing commencements in NSW are likely to jump over the 50,000 mark next year – more than double their trough of 22,344 five years ago – as the state takes the lead in the growing residential market, according to forecasts from the Master Builders Association.
The rise in dwelling commencements over the next three years, which will peak at 58,942 in 2015-16, means the increase in housing supply will be sufficient to meet the state's annual underlying population requirement for the first time in more than a decade.
Expectations of interest rates that won't rise until well into 2015 are a key reason for a stronger growth picture in NSW than six years ago, MBA chief executive Wilhelm Harnisch told The Australian Financial Review. "Residential is stronger," he said. "Residential is where the major difference is." NSW benefiting from pent-up demand
The predictions, published ahead of Thursday's release of building approvals for May, show that while NSW growth lagged that of resource-heavy states like WA and Queensland, it is now benefiting from the pent-up demand that was compounded by poor land-release policies, cumbersome development processes and inefficient developer levies.
A further boost to construction in the most populous state will come as demand retail, office, health and aged-care facilities pushes the value of non-residential building to a peak of $12.5 billion by 2016-17, a level last seen in the run-up to the Sydney Olympics, the MBA says. Engineering construction will also get a boost from the state's planned infrastructure spend.
In contrast, Victoria, which has performed better than its northern rival by virtue of low-cost land and more efficient land-release policies, is likely to take a breather. Housing starts in Victoria are likely to peak at 55,655 in 2016-17, the last of the three years in the planning horizon from a likely figure this year (financial year 2015) of 52,459.
"It was always going to be a challenge to maintain strong growth after such a golden period," the report says. "After a correction in residential building, Victoria will do well to maintain the growth momentum."Stronger industrial, retail building work
Likely growth in non-residential building of 10 per cent in past financial year and 11 per cent this year will come from stronger industrial and retail building work. Engineering work will also be boosted by planned infrastructure spending, peaking at just under $15 billion in 2016-17, the report says.
House construction in Queensland is picking up, and provided interest rates remain low, housing starts at a level of 41,644 in 2016-17 will be getting back towards the peak levels of 2007-8, it predicts. Engineering construction will continue to fall.
WA faces a decline in building starts. After sharp growth, the figure likely peaked last year (FY14) at 27,601 and will tick down over the next three years.
Fairfax Media Management Pty Limited
Document AFNR000020140702ea7300011