While home building continued to drive improvement in the economy last year, more recent data showed that home market will not likely have the same contribution to economic growth in 2018- 2019.
Housing Industry Association (HIA) reported on Wednesday that the housing market is currently weakening due to a slowdown in inward migration since July 2017, constraints on investor finance imposed by state and federal governments, and falling house prices.
On the bright side, the number of approvals for new detached houses is trending higher.
“Irrespective of these emerging factors, the volume of approvals for new detached houses have been tracking around their strongest levels in 15 years and the industry remains buoyed by the task of completing the large volume of new homes which are still in the pipeline,” said HIA’s Principal Economist Tim Reardon.
HIA also underscored that new home building significantly helps grow the economy.
“Stronger new home building, off the back of strong population growth, is continuing to drive the improvement in economic conditions in Australia,” Reardon stated.
“The 3.6% expansion of new home building was a major contributor to the improvement in GDP throughout 2017/18.”
As one may know, Australia’s 28 years of growth has been built on the back of a series of booms in different economic sectors. Notably, the current phase of growth was brought about by the boom in new home building that has started since 2015.
Reardon said that the boom in new home building is slightly due to strong population growth over the past decade.
For reference, today’s national accounts figures indicate that GDP increased by a solid 0.9% during the June 2018 quarter. GDP in the full 2017/18 year was 2.9% higher than in the past year.
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