Housing investment to fall in Victoria: Deloitte
A slowdown in population growth in Victoria could have damaging consequences for its housing sector, according to the June quarter business outlook report compiled by Deloitte and Access Economics.
The report, which provides economic forecasts until 2016, expects private housing investment in Victoria to slow down over the next two years before heading into negative territory during the following two years.
Private sector investment in housing construction increased by 7.8% in 2010-11 to $20.6 billion but is expected to grow by only 5.1% in 2011-12 and by 1.3% in 2012-13.
In 2013-14 investment in Victorian housing is expected to decrease by 3.6% and then to remain stagnant the following year (0.5%) before returning to growth 0f 7.3% in 2015-16.
Private housing investment forecasts – growth rates
Source: Deloitte Access Economics
In contrast, the private sector is expected to pour money into Queensland housing, with Deloitte forecasting growth rates in excess of 10% over the next three years.
Demand is expected to be driven by the construction required to rebuild homes destroyed or damaged by the floods as well as the recovering construction and mining sectors attracting workers from other states following a bit of “kicking and scratching”.
Deloitte Access Economics forecast strong growth in housing investment over the next three years at above 10%, slowing down from 2013 to 2015 before picking up again in 2016.
Investment in housing in resource-rich WA will grow above 5% over the next three years before slowing down, says Deloitte.
The report says the performance of the Victoria’s housing construction sector has a “hint of defying gravity” due to its ability release land more easily than other states.
Although Deloitte Access Economics expects Victoria will maintain its relative strength, it expects the gap between Victoria and other states to narrow during the next few years.
Victoria’s population is expected to grow at just 1.2% over the 2011-12 and by about 1.4% over the next three years, compared with 1.7% growth forecast over the last year.
The outlook is significantly better for the Victorian commercial sector with construction activity expected to grow by greater than 15% over the next three years following a contraction of 2.7% in the last 12 months.
Major commercial projects expected to be completed over the next few years include Grocon’s $1.2 billion redevelopment of the former Carlton and United Breweries site in Melbourne, with work due to be completed in 2014, the mixed use $700 million Bourke Junction project (including offices, a hotel and shops) currently underway at Docklands, the $400 million Greensborough town centre redevelopment due to be completed next year, and $130 million Southbank cultural precinct.Planned works to begin in the next few months include a new $1.1 billion comprehensive cancer centre at Parkville, a $407 million redevelopment of the Box Hill hospital and a new Ikea megastore at Campbellfield.
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