Boost for residential construction investment driven by NSW

87Though mining investment has declined, it seems that residential construction investment will bolster the Australian economy over the next year, according to a February 28 release from the Housing Industry Association (HIA).

The salient point was made by HIA Senior Economist Shane Garrett.

“Our latest set of forecasts suggests that the housing industry will be one of Australia’s good news stories over the next twelve months,” announced Mr Garrett.

Strength in Sydney

Mr Garrett went on to note that NSW will drive market activity, alongside Queensland and Western Australia.

Other states may face more challenges, however it’s clear that the NSW market is prepped for future growth, perhaps due to the heavy interest in Sydney real estate, particularly medium and high density residential dwellings.

Things are looking promising for homeowners, too.

“Stronger prices will speed the accumulation of home equity, facilitating more home renovation loans,” stated Mr Garrett.

Cash rate predictions

The HIA is also confident that the Reserve Bank of Australia (RBA) will not alter the cash rate for the rest of 2014.

At the most recent RBA meeting, the interest rate was left at 2.5 per cent, making credit options more affordable for buyers and investors alike.

A low cash rate will “underpin strengthening activity in housing, and arrest the deterioration in housing undersupply experienced over the past decade,” said Mr Garrett.

Future plans

The HIA is keen to emphasise the function of a strong housing industry when it comes to bolstering national economic growth, too.

Mr Garrett pointed out that the industry body intends to express this view ahead up the federal Budget in May.

“Reforms targeting planning, infrastructure charging and taxation of the sector will enable housing to make a larger contribution to boosting the economic outlook,” said Mr Garrett.

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