HIA - Housing Industry Association Ltd.
HIA - Housing Industry Association Ltd.
08/28/2024 | Press release | Distributed by Public on 08/27/2024 19:47
Tasmanian home building outlook brighter than largest states
HIA released its Economic and Industry Outlook report recently. The report includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories.
"Tasmania commenced construction on 2,220 detached houses in 2023/24, with a modest 1.2 per cent improvement expected in 2024/25, to 2,240," added Mr Collins.
"While these would represent the two weakest years for the state since 2016/17, it is a less severe trough than the decade lows being experienced in Victoria and New South Wales.
"Tasmania has been receiving record numbers of overseas arrivals, as well as a significant number from the interstate exodus from Melbourne and Sydney during the pandemic.
"Extremely low rental vacancy rates across much of the state will sustain underlying demand for new home building, even as population growth moderates.
"Tight rental markets and the rapid deterioration in housing affordability during the pandemic means there is still a lot of work ahead for policymakers.
"Land shortages in Tasmania have seen residential lot prices surge since the pandemic began, with prices up by around 70 per cent in Hobart, and double across the regions.
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.
"Medium density housing development, close to jobs and transport, also needs to do more of the heavy lifting. Commencements of multi-units have been at multi-decade lows recently, with activity currently not expected to gain steam until 2026.
"The removal of policy constraints is critical to supporting this sector. This means abolishing the punitive taxes imposed on the very investors that are so crucial to building higher density housing. These taxes 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.
"There is a clear policy desire for more medium density development, especially in Hobart. The risk is that difficult design guidelines and continued scope for local objections to density may remain as obstacles for the sector.
"The Australian government must streamline visas for in-demand trades so projects can be completed on time and on budget, otherwise projects - especially the larger ones - will struggle to even commence.
"As the situation currently stands, underlying demand would support much greater home building volumes, if policy were to permit it," concluded Mr Collins.
Detached house: Tasmania commenced construction on 480 detached houses in the first quarter of 2024, down by 10.7 per cent on the previous quarter. This is forecast to bounce back, up by 16.2 per cent to 550 in the June Quarter 2024, producing a financial year total of 2,220 in 2023/24. This is 19.8 per cent down from the previous year, and the weakest year for the sector since 2016/17. An improvement from here is forecast, with a 1.2 per cent increase to 2,240 in 2024/25, accelerating to a peak of 2,620 by 2027/28.
Multi-units: Only nine multi-units commenced construction in Tasmania in the March Quarter 2024, down from 60 in the previous quarter and the weakest quarter in over two decades. This is forecast to bounce back to 60 in the June Quarter 2024, producing a financial year total of 150 in 2023/24. This would be the weakest financial year in over two decades, down by almost 50 per cent on the previous year. A modest improvement is forecast from these lows to 170 in 2024/25, continuing towards 470 by 2027/28.