Residential building is set for a strong recovery over the next three years, according to forecasts released this week by Master Builders Australia (MBA).
MBA Chief Economist Peter Jones said the predicted return to more positive conditions for the industry signals light at end of a very long tunnel for the residential and commercial building sectors, but does not necessarily herald a return to boom era levels.
The three-year forecasts to 2015-16 indicate that the value of residential building work done is set to improve strongly after marginal growth in 2012-13.
In real terms, the value is forecast to grow from $46.2 billion in 2012-13 to $60.9 billion in 2015-16.
Dwelling starts are predicted to rise to 164,000 in 2013-14, 179,000 in 2014-15 and 183,000 in 2015-16 – more than a decade after they peaked at around 175,000 in 2004.
The underlying assumption in the forecast is that low interest rates will work to release significant pent-up demand after a long period of underbuilding that occurred at the same time as Australia experienced strong population growth.
“The stronger performing states are forecast to be Queensland, New South Wales and Western Australia”, Peter Jones said.
“The improvement in the Residential Building outlook comes from a very low base and the challenge remains for policy makers to address supply side inefficiencies and impediments that have contributed to the nation’s growing housing shortfall,” he concluded.
The forecasts are derived from a model purposely built for the building and construction industry developed by Master Builders in collaboration with Independent Economics.