Construction Continues to Fall
Monday, 25 August 2008
A newly released report by the Housing Industry Association has forecast that housing construction will decrease by 6% this financial year. Housing construction has already fallen for four consecutive years and with just 145,300 new dwellings likely to be built this year, the gap between supply and demand is rapidly widening. The large ongoing shortfall will serve to put upward pressure on the prices of existing homes. It will also mean there will be no relief for renters, with vacancy rates set to remain extremely low.
Interest rates will play a major roll in shaping the property market over coming years and will eventually provide a stimulus for new development. The Reserve Bank has signalled it will soon make its first rate cut and as the downward cycle continues building will become more affordable. Renewed interest from investors and greater activity from first home buyers should see construction pick up in late 2009.
