Predictions are that Australia’s housing construction boom will sustain growth for about a further five years.
In releasing its latest industry report, forecaster BIS Shrapnel said the building upturn which began six months ago is now at the top of the cycle.
The news for Queensland is buoyant, with Brisbane vacancy rates low and RP Data figures showing the overall Brisbane property market is gathering momentum, having underperformed the combined capitals average since 2008.
Queensland’s overall number of sales were up 14.8 per cent for the year ending June 2014.
Associate director Kim Hawtrey described the national market as “one of those rare times in Australia’s economic history”.
“Residential construction in Australia is in a really sweet spot,” Mr Hawtrey said. “We have a tail wind behind us, we’ve got the wind at our backs for a change after many years of struggling since the GFC.
“I can’t emphasise enough how extraordinary this moment is in Australia’s home building history.”
Mr Hawtrey said the fundamentals underpinning the market suggested the boom was sustainable due to a stock deficiency of 100,000 houses Australia wide – including 20,000 dwellings in Queensland.
“What we are seeing now is the legacy from the GFC where we simply haven’t built enough dwellings,” he said.
“So if you look at the deficiency of dwellings and the underlying population growth, the dwelling building boom, we believe, is very sustainable indeed.
“Consistent with that is the vacancy rate figures. Brisbane is at 2.3 per cent – significantly below the 3 per cent balanced rate so that is also consistent with our underlying demand reading suggesting there is a long way to go in this dwelling construction recovery.”
RP Data national research director Tim Lawless said the flow-on effect of buoyant property conditions had also resulted in increased land prices.
Statistics for the 2013-2014 financial year revealed the median selling price for capital city land increased by 6 per cent, taking the price to $530 per square metre.
“The relatively stable ratio of land to house price over time suggests that the cost of materials and labour has changed very little while the rising cost of vacant land has pushed up housing costs,” Mr Lawless said.
“The combination of smaller land lot sizes and rising prices is likely to continue.”
First-home buyers Rob Burnham and Kelly Teesdale, both aged 26, are discovering the heat in the market as they battle other couples to secure a house in the $450,000 to $500,000 price range.
Looking for a three-bedroom house in Brisbane’s inner-northern suburbs, the couple would like to secure a block with enough room to extend the house later.
“Everyone is out there trying to do the same thing as us,” Mr Burnham said. “Particularly in this price range. It’s a good time to buy because interest rates are low, but nobody wants to overextend themselves (financially).”
Mr Burnham said the couple were out every week, lining up a list of houses to inspect and attending auctions regularly to gauge market values.
House-and-land developer Ausbuild said any industry warnings of a “housing bubble” simply did not apply to southeast Queensland.
Ausbuild, which has more than 250 homes sold and under construction so far this year, said the analysis was focused on southern states.
Joint managing director Matt Bell said the actual situation unfolding locally “couldn’t be more different to the Sydney and Melbourne markets”.
“The housing construction sector is moving at a steady, sustainable pace, with land being released at a rate that is meeting demand in a responsible way,” Mr Bell said.
“Prices are still competitive, and will continue to be so, given the steady and continuous rate of supply by developers in the market.”
Mr Bell said there needed to be accurate and responsible analysis of the Queensland market as broad claims instantly translated to jitters among buyers.
“When Queensland is on track, and managing both supply and demand well, the last thing we need is to scare buyers who are only just getting comfortable back in the marketplace post-GFC,” he said.
“Confidence is everything when people are looking to make what is the most significant purchase of their lifetime.”
The BIS Shrapnel Building Industry Prospects report for September forecasts a lift in both house prices and residential building activity in 2014/15, accompanied by an 8 per cent increase in renovation activity.
Private house starts are forecast to lift 13 per cent with medium density to rise by 6 per cent.
Queensland’s residential building activity has been driven by the “other dwellings” sector which jumped 50 per cent to the year ended March 2014 – largely reflecting the demand for high-rise apartments. Detached houses picked up only 2 per cent during the same period.
While BIS Shrapnel declared Brisbane as the powerhouse driving the upturn in the state’s residential building industry, strength is starting to return to the Gold and Sunshine coasts, while smaller centres like Toowoomba and Townsville are also picking up.
Original article published at www.news.com.au by Paula Shearer, The Courier Mail 20/9/2014