Residential construction a lynchpin to national economy
A savvy Australian property investor will have a clear strategy in place to build their portfolio.
A savvy Australian property investor will have a clear strategy in place to build their portfolio. In addition to setting down long term wealth-creation goals, those with an interest in the real estate market should have an ear out for what's going on in the market.
The Housing Industry Association (HIA) 2014 Autumn/Winter National Outlook report provides valuable insight regarding construction activity. For those looking to expand their investment property portfolio, this report is certainly an interesting read. So - what are the key points?
Dwelling commencements creep to record levels
"Residential construction investment will make strong contributions to Australia's economic growth this year and next, and will boost demand across significant supply/distribution sectors," explained HIA Chief Economist Harley Dale.
Construction in the sector is currently assisting balanced growth across the national economy, but it's important that decision makers don't rest on their laurels. Given that the Australian population is ageing - and expanding - it's essential that any regulatory barriers currently in place are lifted, suggested Dr Dale.
However, there are some very positive figures emerging that will capture the attention of investors.
The 2013/14 year is forecast to deliver 180,000 new dwelling commencements, which would be the second-greatest figure recorded, according to the HIA report.
The largest figure on record is 187,000 new dwelling commencements, achieved in 1994.
Multi-unit dwellings increase in popularity
Over half (56 per cent) of new dwelling commencements for the 2013/14 year are expected to be detached houses, while 44 per cent are anticipated to be multi-unit dwellings.
This is a more even split compared to years gone by - a decade ago, detached houses represented 68 per cent of total new dwelling commencements.
This growth in multi-unit commencements show a preference for this type of housing, signalling investment and living choices for a growing population.
Future challenges identified
The National Outlook report offers up plenty of promising statistics, but the HIA is aware of the challenges facing the construction industry.
For instance, the industry body noted that while the current cyclical recovery is cause for celebration across the nation, there are still "substantial barriers" for the years to come, particularly thanks to the booming population.
These barriers include a skilled labour shortage, disproportionate tax and regulatory costs and inadequate land supply in the likes of Sydney and Perth.
It's not just the HIA making comments about the nation's industry.
"Investors remain a key driver of the upturn in residential building activity, with the value of commitments for investment housing continuing to power ahead, up by 2.3 per cent in April to be 30 per cent higher than a year ago," explained Master Builders Australia Chief Economist Peter Jones in a June 10 statement.
Solidify your property interests now in order to beat potential issues facing this dynamic sector in the future.