A pick-up in new housing construction in Australia is at least a year off, according to forecasts by BIS Shrapnel.
The economic and building research firm is forecasting 1.4% year-on-year growth in new private dwellings in the current 2012-13 financial year, but then a big jump of 10.6% growth in the 2013-14 financial year.
This improvement will coincide with an overall pick-up in transaction activity in the property market as a modest recovery kicks in, according to BIS Shrapnel.
The main beneficiaries of the pick-up are expected be Queensland, WA and NSW – with the first two benefiting from both a historical shortfall in housing construction relative to demand as well as the flow-on impact of overseas and interstate jobseekers taking up jobs tied to the mining boom. This is a new trend, contrasting with new immigrants previously heading to Melbourne or Sydney.
Undersupply issues will drive the NSW recovery, says BIS Shrapnel.
However, Victoria will not undergo a revival in new housing construction due to a surplus of building from 2009 to 2011, mostly in new apartment projects in the Docklands and the inner city, the firm says.
South Australia is forecast to undergo a third consecutive year-on-year slump in new dwelling construction of 12% in 2012/13, before activity picks up by a modest 7% in 2013/14.
BIS Shrapnel chief economist Frank Gelber says the new dwelling construction outlook for Tasmania and the ACT are particularly weak.
In the case of WA, the new housing boom will start early with a 26% year-on-year increase in 2012/13 followed by a 17% year-on-year rise in the following year.
Queensland new dwelling commencements will pick up by 10% in 2012/13 and then by 30% in 2013/14.
The new housing sectors in NSW and Queensland will also be boosted by the introduction of $15,000 state government handouts for first-home buyers purchasing or building a new home - with the former kicking in on October 1 and the latter already commenced.
However Victorian dwelling commencements are expected to fall 14% in 2012/13 and then by a further 9% in 2013/14 due to ‘overbuilding in the short term” with BIS Shrapnel figures showing the state built around 49,000 new dwelling per year against demand of just 38,000.
Gelber says the oversupply issue in Victoria is a relatively modest one and he expects Victoria to grow in line with a second housing growth spurt in the second half of the decade.
“Victoria is paying the price for being overly optimisic," he says.
“The recovery in private dwelling building at the national level will be welcomed by the building industry, that is expected to remain under pressure due to a few more quarters of week private non-dwelling building and continued declines in public sector building – both dwelling and non-dwelling,” says BIS Shrapnel in its economic outlook report for September.