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Housing : July 2009
Positive prospects HIA predicts that the housing industry’s prospects are set to improve over the next 12 months, with the following factors working in the industry’s favour: a) The industry is no longer strangled by mortgage rates of more than nine per cent. Interest rates have now dropped as low as five per cent and appear set to stay low over the next 12 months. b)The first home buyer’s grant, which was boosted to $21,000 for new housing, has been extended to December 2009. Recognising the positive impact the boost has already had on state economies, many states are looking to extend the grant beyond this date. the federal fiscal boost and lower interest rates, HIA expects starts to head over 11,500 again in 2009/10, albeit a little lower than the great year that was 2008/09. Western Australia starts also fell in 2008/09, with HIA expecting the state to start 18,290 dwellings, a drop of 18 per cent on the previous year. ‘Affordability pressures have eased moderately in Perth,’ says Ben, ‘with house prices dropping by more than the other major capitals and interest rates dropping to 30-year lows.’ HIA expects these factors, combined with the federal housing stimulus, to produce a 13 per cent gain over the next financial year. This gain will keepWA well below their building requirement which is close to 30,000 dwellings, based on it being the strongest population growth state. Tasmania bucked the trend in 2008/09 by managing a flat year for building starts. Affordability remains key to Tasmania’s success, with the boost to the First Home Owners’Grant providing more relief thanks to the state’s lower house prices. HOUSING JULY 2009 HIA predicts that Tasmania will continue to perform well in 2009/10. Factoring in the federal fiscal boost and lower interest rates, HIA expects starts to nudge 3000 in 2009/10, up three per cent on what was a solid previous year. HIA Northern Territory expects that NT lifted 16 per cent over the 2008/09 year to 1220 dwelling starts.While an improvement is always welcome, unfortunately the territory is nowhere near building enough homes to accommodate this booming region. Moderate recent gains in housing finance and building approvals suggest that some small growth may come out in 2009/10 but the housing shortage is set to continue for years to come. The Australian Capital Territory experienced a successful 2008/09 for new housing with 2640 new dwellings built, 17 per cent more than the previous year. This was a stunning result considering the poor property market and high interest rates. Continued strength in building approvals and home loans should see another good year over 2009/10; however, achieving a similar result to c) In February this year the federal government announced that it would build 20,000 social houses over the next two to three financial years to boost the dwindling stock of public housing and to help increase employment in residential construction. These factors will take time to appear on the ground. However, the residential forward indicators (building approvals and new housing loans) are much improved over the first half of 2009 and suggest a pick-up in building activity over the second half of 2009. HIA expects starts to lift by eight per cent to 142,000 over the 2009/10 year. 2008/09 will be difficult. HIA expects ACT starts will be down by 13 per cent to 2290. As this issue went to press, HIA reported that the number of loans for new dwellings had risen for nine consecutive months, pointing to a modest recovery emerging for residential construction. H 15