According to Master Builders Australia, the construction of new homes across the country goes through the toughest year for almost 10 years, which should weigh on the residential real estate market .
The bleak forecast for the new housing construction sector was motivated by falling real estate prices and the fallout from the royal commission really began to hurt.
"About 234,000 new homes were built at the height of the market in 2016/17. We expect production to drop to 210,200 in 2018-19 and 197,500 in 2019/20. A succession of further declines will bring the number of new homes to 175,900 by 2022-2023, "said Shane Garrett, chief economist at Master Builders Australia.
New housing construction reached record levels in the middle of the decade, reflecting strong population growth, strong housing price increases, very low interest rates, and sustained demand from homeowners. foreign buyers. However, many of these elements are no longer present. Housing prices, for example, have fallen dramatically in a number of key markets, while state governments have put in place prohibitive barriers for foreign buyers.
In addition, factors related to developments within the federal government contributed to the slowdown in the market.
"The reaction of the Hayne Royal Commission has slowed the circulation of mortgage credit in the housing market, and this is the main factor slowing activity for the time being. The uncertainty surrounding the upcoming federal election also delays activity in the market. People want to know what the color of housing policy will look like before making commitments, "Garrett said.
The solid foundations of the Australian economy currently maintain the underlying demand for new housing. However, this does not translate into more vigorous activity on the ground because of the credit crunch and the paralysis of pre-election decisions.
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