Tag Archives: construction

What does new housing construction mean for you?

What does new housing construction mean for you?If you’re on the hunt to buy a house, you might notice there’s been a shortage of new property in certain capital cities.

While auction listings have been high as vendors race to put up their homes for sale, it doesn’t reflect the “10 years of underbuilding” noted by Nick Proud from the Property Council of Australia.

Supply has been tight in searing property markets like Sydney and Melbourne, which have been unable to keep up with climbing demand. As observed by CoreLogic RP Data’s monthly indices, this has lead to soaring dwelling values, with both of these cities respectively seeing a 16.16 and 13.94 per cent annual increase in the year to October.

However, this supply shortfall is soon to change
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New builds on the way

Figures from the Australian Bureau of Statistics show that there was a record high of new housing constructions this year. In 2014 to 2015, 211,976 new homes had been commenced. This marks an increase of 16.9 per cent and “caps three consecutive years of growth for new home building”, mentions the Housing Industry Association (HIA) Chief Economist Dr Harley Dale.

This result has followed in step behind the HIA’s news in the previous quarter, which reported peak building approvals in the June quarter. The 56,351 buildings approved to be built would begin to trickle into the market as they move from planning to construction stages, as seen by the spike of new home commencements.

What does this mean for you?

This will do two things for house hunters across the country. Firstly, prices in the housing market will cool as supply arrives in force. As mentioned by the Property Council of Australia, national residential construction may “create enough housing to satisfy growing demand”.

Figures from CoreLogic RP Data reveal that this stuttering in price growth can already be seen now. Sydney and Melbourne both recorded a 1.5 and 3.1 per cent increase in dwelling values over the September quarter – a notably slow change when compared to previous quarters this year.

If you’re seeking to buy real estate in the near future, this could be good news  for you. The market could soon swing in your favour as prices ease in these markets.

Secondly, the influx of new builds will provide buyers a greater choice of real estate in Australia. More new houses for sale mean there’ll be a wider range of property types, house sizes and more, available for people to choose. This will give you greater opportunity to find housing that’s ideal for your needs and lifestyle.

How does construction support affordability?

How does construction support affordability?It’s hard to ignore the rapid rate at which homes have been popping up around the country. Construction has been a bright spot in real estate in Australia for some time, with a steady stream of properties helping to support confidence, jobs and keep the economic wheels spinning. Not only that, but it creates opportunities to buy a house.

This impressive activity is showing little sign of slowing down, either, as new figures from the Australian Bureau of Statistics (ABS) show strong growth during May. According to the latest building approval data, the total number of new dwellings approved for construction increased 2.4 per cent during May in seasonally-adjusted terms.

In fact, there has been a 17.6 per cent rise over the 12 months to May. The Property Council of Australia pointed out that this is an encouraging sign for affordability, particularly for real estate in Sydney.

Executive Director Residential Mr Proud noted there were 70,000 more approvals in the past year than in the 12-month period to May 2012, with New South Wales in particular showing strong improvement. Some 57,088 new dwellings were approved in seasonally adjusted terms in NSW for the 12 months to May 2015, a 10 per cent rise on the same period to May 2014. This could represent an important step forward for reducing housing deficits and counteracting rapid price growth.

“The only meaningful way to take the pressure off prices is to increase new housing supply,” Mr Proud said.

Strong growth in multi-unit properties

Construction activity has been especially strong in the apartment segment. Master Builders Australia said multi-unit approvals posted an all-time record in May, with 7,300 dwellings in buildings of four storeys or more approved over the period. While this means multi-unit homes for sale may be more accessible when completed, detached houses still face supply pressures.

Master Builders Chief Economist Peter Jones said policy restrictions on releasing greenfield land may be holding the industry back. This point was echoed by the Housing Industry Association (HIA), which highlighted a 15.1 per cent increase in multi-unit approvals during May. However, approvals for freestanding homes dropped 8.5 per cent over the month.

HIA Senior Economist Shane Garrett said this means policy makers need to do more work to ensure a steady supply of both affordable apartments and houses for sale.

“They must rectify the bottlenecks in the planning system, redress the excessive fees and charges on new residential developments and ensure that the pipeline of residential land will meet the ongoing community demand for new homes,” he concluded.

With such a solid supply of properties in the pipeline, maintaining this level can support affordable and help households buy a home in Australia.

Lending for real estate improves

Lending for real estate improvesInvestors have taken an increasingly active role in the Australian real estate scene, but it looks as though owner-occupied finance is on the road to recovery. Finding the balance between the two hasn’t been easy, but recently released figures from the Australian Bureau of Statistics (ABS) could indicate that the market is tilting back into alignment.

It’s hard to argue that investment hasn’t been rampant of late. CoreLogic RP Data analysis has revealed that investors commitments were worth $12.9 billion in March, a staggering 105 per cent increase in a little under four years. The Reserve Bank and regulators have been trying to get a handle on the insatiable demand for homes for sale, but ABS housing finance data suggests a change could be on the horizon.

Construction takes the cake

The total value of lending for property climbed 2.9 per cent during April in seasonally-adjusted terms, according to the ABS. Owner-occupied housing experienced a sizeable jump, rising 3.1 per cent over the month. Meanwhile, lending for investment homes rose a slightly slower 2.6 per cent.

Even more encouraging for the property market, the number of loans taken out for new home construction increased over the same period. There were 4.3 per cent more of these commitments recorded, as well as a 1.6 per cent jump in the number of loans for purchasing a newly construction property – a promising figure that Master Builders Australia has welcomed enthusiastically.

Chief Economist Peter Jones said this data could show that new home building is taking the lead in the finance department, which is encouraging for the supply of affordable real estate in Australia.

“The latest housing finance figures for April shows a welcome turnaround away from the focus on investment toward finance for the construction of houses,” Mr Jones said.

“The industry is looking to the non-investor sector to strengthen over the next 12 months to ensure that this rebalancing takes hold.”

What about first home buyers?

What’s more, the Housing Industry Association (HIA) hinted that first time buyers are becoming more active in the property market. ABS figures show that the number of loans for freshly-minted buyers as a proportion of all dwelling commitments rose to 15.2 per cent in April, up from 15.1 per cent in the previous month.

This might not seem like a big difference, but HIA Chief Economist Dr Harley Dale said it is the highest level seen in a year. It’s another encouraging factor for the property market, as it could indicate that these buyers are becoming a bit more confident in their pursuit of home ownership. In fact, Dr Dale suggested that the percentage figure could be higher if it were to include those first time buyers who get their start in the investment market.

If the popularity of housing finance for construction persists, the mix of property for sale can continue to expand – and young buyers may find themselves in a good position to look for houses for sale in the coming months.