The number of new homes under construction fell by 15.2% this year due to the low number of construction projects approved in the first quarter of 2019. Another decline in construction activity was about 11% throughout the year is also expected. , according to the Housing Industry Association (HIA).
"Preliminary data suggest that the housing market has gone from a high annualized residential construction rate of about 220,000 homes a year this past year to about 183,000 at the beginning of the year. 2019, "said HIA chief economist Tim Reardon. "We anticipated that this correction of the construction of new homes would take two years, not six months."
HIA reported that market confidence declined at the end of 2018 due to the correction of housing prices. This change had a negative impact on all market segments as investors and homeowners delayed their purchase decisions and foreign investment dropped due to a series of government restrictions. .
The beginning of the year promises promising for the construction sector. A strong national economy should allow housing construction to weather the slowdown. However, GDP has slowed.
Reducing interest rates in 2019 will not have the same positive impact on new housing construction as in previous cycles, according to the chief economist of the IHA, Tim Reardon.
"The RBA has repeatedly stated that it was looking for a deterioration of the labor market before continuing to reduce interest rates. If they expect this trigger, there is a risk that it will be too late for the residential construction industry, which will adjust employment levels for this weaker activity, "he said. he declares.
Reardon highlighted the importance of credit crunch in the results by indicating that a relaxation of APRA loan restrictions would have a greater impact on housing construction and the economy in general, than another reduction in interest rates only.
"Regardless of the timing of lower interest rates or the removal of regulatory restrictions on the housing market, the effect of the slowdown in the economy and the lingering effects of the credit crunch will continue to drive down the pace of construction. new homes, "he said. "As a result, it is necessary to further downgrade our expectations regarding the speed of the current housing market downturn."
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