New dwelling starts are forecast to increase for a third consecutive year but this is likely to be the peak of the boom, according to Australia’s major builders.
Growth of 7.7% in 2014-15 would take commencements to a record level of 195,936.
“We retain the view that the 2014-15 year is likely to represent the peak in the current cycle, although the heightened uncertainty that comes with breaking records means further growth shouldn’t be ruled out,” says the Housing Industry Association (HIA) in its latest National Outlook.
The key forecast, that after three consecutive years of strong growth, is that dwelling commencements will decline by 5.7% in 2015-16 and a further 4.7 per cent in 2016-17.
Renovations activity is forecast to grow by just 0.2% in 2014-15 but is forecast to rise of 2.8% in 2015-16, followed by an expansion of 3.2% in 2016-17, taking the value of renovations to $30.3 billion.
HIA chief economist Harley Dale says residential construction is the success story of the Australian domestic economy.
“We need to build on the lofty heights being achieved this new housing cycle and ensure that supply in coming years meets the requirements of a growing and ageing population,” says Dale.
Growth is uneven across the states. NSW, Victoria, Queensland and Tasmania will see growth in home building but the rest, including the mining boom state of Western Australia, will see falls.
State 2014-15 forecasts:
NSW – A rise of 11.6% would take dwelling starts to 51,624. Activity will then decline towards 45,000 per year over subsequent years.
Victoria – A rise of 7.3% would take dwelling starts to 55,762. Activity is forecast to then start to decline below 45,000 per year towards the end of the decade. #
Queensland – A rise of 14.9% is forecast to take dwelling starts to 40,856. Activity is forecast to remain above 40,000 per annum over subsequent years.
South Australia – A decline of 7.2% is forecast to take dwelling starts to 9,945. Activity is projected to increase modestly over subsequent years.
Western Australia – A projected decline of 14.4% would take commencements to 25,552. Activity is projected to continue declining over subsequent years
Tasmania – A forecast surge of 24.2% would see dwelling starts reach 2,383, the highest level in four years.
Northern Territory – Dwelling commencements are forecast decline by 2.6% to 1,973. A subsequent decline of 14.3% in 2015-16 is forecast to then take starts down to 1,691.
Australian Capital Territory – A forecast decline of 16.6% would take dwelling starts down to 3,541. Activity is projected to fall again in 2015-16 which would leave commencements at 3,227.
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