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{{propApi.successMessage}} {{region}} Change locationNSW home building outlook remains constrained
NSW home building outlook remains constrained
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HIA recently released its latest Economic and Industry Outlook report. The report includes updated forecasts for new home building and renovation activity nationally and for each of the eight states and territories.
“The 2024/25 financial year is expected to mark the trough in the cycle for New South Wales detached housing, concluding the two weakest years for house commencements since 2012/13,” added Mr Bare.
“Higher density housing development is even more constrained. Commencements of multi-units have halved since 2016, with 2023/24 marking the weakest year for the sector since 2011/12. Activity is not expected to truly gain steam until the second half of 2025.
“Surging interest rates and pandemic cost blowouts have been the most pertinent variables driving down home building activity over the last two years, but there are many other policy factors constraining the outlook.
“Land shortages in New South Wales are more acute, making land less affordable than in any other jurisdictions. There is significant upside potential to the outlook for detached home building if land is fast-tracked and made shovel-ready more rapidly in the coming years.
“In a major global city like Sydney, higher density housing development in existing suburbs, close to jobs and transport, also needs to do more of the heavy lifting.
“This means abolishing the punitive taxes imposed on the very investors that are so crucial to building higher density housing. These taxes, which the NSW government inexplicably elected to increase further in the latest Budget, perversely cost tax revenue in terms of lost construction activity, productivity and economic growth.
“Governments must also ensure sufficient infrastructure to accommodate higher density housing and address local resident and Council objections and obstacles to such development.
“The Australian government must streamline visas for in-demand trades so projects can be completed on time and on budget; without adequate trade resources, large apartment projects will struggle to even commence.
“HIA forecasts do not predict the kind of home building numbers that would produce the levels of supply needed in New South Wales under current policy settings,” concluded Mr Bare.
Detached houses: New South Wales commenced construction on 5,470 new detached houses in the first quarter of 2024, down by 5.4 per cent on the previous quarter. This is forecast to decline by a further 4.8 per cent in the June Quarter 2024 to 5,210, producing a financial year total for 2023/24 of 21,070. This would be 18.8 per cent down from the previous financial year, with a further 0.8 per cent decline forecast to 20,890 in 2024/25. This would mark the trough in the cycle for New South Wales detached housing, and the two weakest financial years since 2012/13, before bouncing back to 23,160 in 2025/26 and reaching a peak of almost 24,000 by 2027/28.
Multi-units: The multi-unit sector in New South Wales continues to disappoint, with just 3,490 new dwellings commencing construction in the March Quarter 2024, down by 37.4 per cent on the previous quarter. This is expected to bounce back by 59.4 per cent to 5,560 in the June Quarter, producing a financial year total of 19,400 in 2023/24. This would be 18.3 per cent down from the previous year, and the weakest financial year since 2011/12. A 22.0 per cent increase to 23,660 in 2024/25 will conclude the weakest three years of the decade for New South Wales multi-units, heading back up to a peak of 38,200 in 2027/28.
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