The Housing Industry Association (HIA) has released its latest housing forecasts, which predict a significant fall in total dwelling commencements over the next three years:
From a national perspective, detached house commencements are forecast to ease by 1.7 per cent in 2016/17 ahead of a further decline of 7.3 per cent in 2017/18. After falling to a low of 104,800 starts in the 2018/19 year, the level of detached house building is forecast to gradually improve across the out years of the forecast horizon…
HIA is forecasting that multi-unit dwelling commencements will remain at quite a high level in the 2016/17 financial year, albeit with an annual decline of 11.3 per cent. Looking beyond 2016/17 is when we anticipate commencements will post more significant declines. Multi-unit commencements are forecast to decline by around 25 per cent in 2017/18, and then by a further 12 per cent in 2018/19. The 2018/19 year is projected to be the low point of the cycle for multi-unit commencements, when 68,400 starts are forecast to occur…
So, putting the two charts together, the HIA is forecasting that total dwelling commencements will fall by 6.5% in 2016-17, 15.6% in 2017-18 and then by 5.3% in 2018-19.
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Hence, housing will likely to drag on employment and growth from late this calendar year.
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.
