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18/04/2007
Despite a predicted 9 per cent fall in the current financial year, NSW housing starts are on the up, reports news.com.au...
Economic forecaster BIS Shrapnel has predicted an 8 per cent rise for NSW in 2007-08 in a fragmented national housing market in which future gains in Queensland particularly will be offset by losses in the over-heated West Australian home market.
"NSW and Queensland commencements will recover in 2007-08, but the affordability millstone is weighing down demand for new dwellings in WA, and we expect that market will experience a downturn," said BIS Shrapnel senior project manager Jason Anderson.
The author of BIS Shrapnel's latest Building Industry Prospects bulletin, Mr Anderson said a gradual improvement in housing affordability in the eastern states meant the strength of underlying demand would become the key driver of starts in 2007-08 and beyond.
Nevertheless, for the current financial year the report predicts a 5 per cent fall in Victoria and 19 per cent in the Northern Territory on top of the 9 per cent drop in NSW and 3 per cent in Western Australia. If its NSW forecast is correct, the 29,150 starts this financial year will be the first time they have fallen below 30,000 since 1958-59.
The BIS Shrapnel report mirrors a Housing Industry Association prediction last week that Australia-wide starts would fall 1 per cent over the current financial year followed by growth of 2 per cent in 2007-08.
NSW and Queensland ‘best prospects’
For 2008-09 and 2009-10 the HIA forecasts an 8 per cent rise that will translate to 166,870 housing starts, well above the 160,000 homes the peak industry organisation believes are needed each year, and a figure not reached since 2003.
Mr Anderson said substantial pent-up demand in NSW and Queensland meant both states had the best prospects for growth.
According to Mr Anderson, NSW is already seeing the first signs of recovery through strong building markets in locations such as the Hunter.
Affordable land and a strong local economy, fuelled by coal, meant areas away from the coast particularly were strong.
"Places like Maitland and Cessnock are doing particularly well," he said.
Mr Anderson said medium-density development would drive NSW's forecast 8 per cent rise in for 2007-08, even though the state would remain fundamentally undersupplied.
While South Australia is forecast to stay on course, Western Australia receives the report's biggest brickbat.
Total starts are forecast to fall 3 per cent in 2006-07, followed by a sharper 11 per cent drop in 2007-08.
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