HIA: dwelling construction to fall for next 3 years

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The Housing Industry Association (HIA) has released its latest National Outlook, which forecasts a 10% decline dwelling starts this financial year, from 232,540 to 209,050, with a further 16% fall forecast for 2017-18, before another 5% decline in 2018-19; although the HIA admits there are downside risks to its forecasts (see next chart).

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According to the HIA:

“As the down cycle in new home building unfolds, the record pipeline of medium/high density dwellings in particular creates considerable uncertainty as to the timing and magnitude of the decline in construction.”

HIA’s forecasts are for a peak of over 232,500 new dwelling commencements to have been reached in 2015/16, which will be followed by three consecutive years of decline. New dwelling commencements are forecast to bottom out at a level of around 166,500 in 2018/19, but there is downside risk to this forecast under current economic and political settings.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.