The Housing Industry Association (HIA) has released its latest Housing Outlook report, which forecasts a peak in dwelling starts this financial year (at 216,120), before construction falls by 24% to 164,180 in 2017/18 (see next chart).
Following an expected 1 per cent rise in total new dwelling commencements in 2016/17, the HIA is forecasting a decline of 13 per cent in 2016/17 which would take commencements to a still historically high level of nearly 189,000. The cycle is forecast to bottom in 2018/19 at around 163,600, but there is downside to this outlook.
This is bad news for the East Coast capitals, in particular, which are driving the boom and whose economies are highly dependent on ongoing dwelling construction:
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The falling dwelling construction over the next few years also means that a triple hit to jobs is coming as mining investment also craters and the local car assembly industry shutters.
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.
