Invest
Housing construction falls to post-GST low
The number of houses being built has experienced its most significant fall since the introduction of the GST, which is causing the national economy to stall, new analysis has found.
Housing construction falls to post-GST low
The number of houses being built has experienced its most significant fall since the introduction of the GST, which is causing the national economy to stall, new analysis has found.
According to AMP’s Econosights, the last home price boom (from 2012 to mid-2017) lifted the price by nearly 150 per cent, although the fund managers warn the next upswing will not be as large.
AMP’s senior economist, Diana Mousina, believes that despite previously strong gains being unlikely, it still provides an attractive investment opportunity for investors.
“Despite our expectations for moderate capital and rental growth in housing nationally over the next few years, the favourable tax treatment of housing in Australia still makes it an attractive investment, especially while bond yields are so low,” Ms Mousina said.
AMP Capital believes a number of factors will stop houses reaching previous growth cycles, as Australians adapt to new levels of debt.
“There are a number of factors [that] will limit home price growth, which include: higher household debt to income ratios, tighter bank lending standards, more unit supply to enter into Sydney and Melbourne property markets and a weak economic backdrop,” Ms Mousina said.
While short-term growth is expected to be around 10 per cent in 2020 over the medium terms, houses will grow moderately, according to Ms Mousina.
“After 2020, we expect price growth to be more moderate, around 5 per cent per annum. The lift in home prices is also extending regionally with moderate gains in Brisbane, Hobart and Canberra. Perth prices are finally stabilising after years of declines, while Darwin prices are still declining,” Ms Mousina said.
Overall, the growth in the housing market is expected to still have an impact on inequality, despite growth slowing in 2021.
“While low interest rates have improved housing serviceability in Australia over recent years, affordability concerns are still an underlying issue, especially in Sydney and Melbourne and could become an issue when interest rates eventually start rising again,” Ms Mousina said.
The underlying lack of supply, which is helping to grow housing prices, is not just having an impact on the prices of property but the economy at large, AMP’s insights also found.
“The recent housing construction cycle peaked in 2018. Building approvals are now 60 per cent below their 2018 peak levels. At its high, new housing construction accounted for 6 per cent of GDP, and we expect it to bottom at 5 per cent of GDP in mid-2020, which means a total 1 percentage point detraction from GDP growth,” Ms Mousina concluded.
About the author
About the author
Property
How to buy house and land packages in Australia
If you’re planning to buy a house and land package, it can be tricky if you’re not familiar with the ins and outs of such deals. Here’s our guide to make this purchase easier for you. ...Read more
Property
How first home buyers can take advantage of the budget
While the 2021 budget included a number of measures relevant to property investors, an expert has questioned whether any of them could yield an impact on rising buyer imbalances and reduced liveabilit...Read more
Property
First home buyers at the frontline of Frydenberg’s charm offensive
There are few surprises to be found in this year’s federal budget, with Australian property investors and first home buyers set to benefit from new and expanded measures. ...Read more
Property
May could be the beginning of the end for housing pricing boom
Experts have suggested that recent growth in prices could mark the peak of the pandemic bounceback for the housing market. ...Read more
Property
Treasurer announces home loan assistance packages for single parents
The federal government has announced a new scheme targeted at helping single parents with limited deposits into the housing market. ...Read more
Property
Australian housing market now valued at $8 trillion
The Australian dwelling market has reached a new record high, with the total value of residential real estate breaking the $8 trillion mark for the first time. ...Read more
Property
A generation of Aussies could be locked out of the housing market as prices boom
A booming property market is set to see a generation of younger Australians priced out of the market, a shadow assistant minister has said, challenging the narrative that younger people are failing...Read more
Property
Is the property market reaching its summit?
While home values continued to rise across the country in April, current trends are pointing to the possibility that the property market has peaked, a new report has revealed. ...Read more
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Property
How to buy house and land packages in Australia
If you’re planning to buy a house and land package, it can be tricky if you’re not familiar with the ins and outs of such deals. Here’s our guide to make this purchase easier for you. ...Read more
Property
How first home buyers can take advantage of the budget
While the 2021 budget included a number of measures relevant to property investors, an expert has questioned whether any of them could yield an impact on rising buyer imbalances and reduced liveabilit...Read more
Property
First home buyers at the frontline of Frydenberg’s charm offensive
There are few surprises to be found in this year’s federal budget, with Australian property investors and first home buyers set to benefit from new and expanded measures. ...Read more
Property
May could be the beginning of the end for housing pricing boom
Experts have suggested that recent growth in prices could mark the peak of the pandemic bounceback for the housing market. ...Read more
Property
Treasurer announces home loan assistance packages for single parents
The federal government has announced a new scheme targeted at helping single parents with limited deposits into the housing market. ...Read more
Property
Australian housing market now valued at $8 trillion
The Australian dwelling market has reached a new record high, with the total value of residential real estate breaking the $8 trillion mark for the first time. ...Read more
Property
A generation of Aussies could be locked out of the housing market as prices boom
A booming property market is set to see a generation of younger Australians priced out of the market, a shadow assistant minister has said, challenging the narrative that younger people are failing...Read more
Property
Is the property market reaching its summit?
While home values continued to rise across the country in April, current trends are pointing to the possibility that the property market has peaked, a new report has revealed. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
