Recovery expected for New South Wales
The condition of the construction industry is an important indicator of economic health, future growth and recovery.
Commercial expansion and property investment are often synonymous with a strong economy, spurred on by high demand from a growing population.
When building numbers are sluggish, it means that demand has dropped due to a number of factors, which vary from state to state.
Last month, it was reported that dwelling recovery starts had risen by a very small margin in New South Wales.
The numbers – reported by the Australian Bureau of Statistics – illustrated an inability to meet the underlying demand for housing of about 15,000 homes, according to Housing Industry Association (HIA) executive director for NSW David Bare.
Mr Bare commented further that the situation would affect affordability in the long term.
However, a recent forecast from the HIA’s New South Wales Outlook predicted a recovery for the 2012-13 and 2013-14 seasons.
Home starts and renovation numbers are expected to increase after an initial fall in the current year.
HIA’s acting executive director for NSW Natalie Shymko was optimistic for the coming years but stressed there is still work to be done.
She said: “The tide has not quite turned yet with housing starts and renovations activity set to fall in the current financial year and leading indicators signalling the risk of further weakness.”
NSW housing starts are forecast to fall by 5.6 per cent in 2011-12 to a level of just 29,233 but are then expected to grow by 12.7 per cent in 2012-13 and 2.7 per cent in 2013-14, reaching a level of 33,834.
Ms Shymko reiterated the HIA’s view that the Reserve Bank of Australia needs to cut interest rates to support growth, after its recent decision to hold the rate steady at 4.25 per cent.
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The HIA is after interest rate cuts but one of the overlooked issues is the supply of land in the North west and South west sectors of Sydney (the growth corridors) and the prices of the available land. It is controlled by the major players and they have priced themselves out of the market. So its simply a case of Economics 101 – Supply and Demand with price issuses.