Policy shift for the building industry?

Investing-in-New-South-Wales-or-buying-a-home-in-the-area-may-be-a-great-option-giving-business-confidence_157_67995_0_14099658_300Master Builders Australia (MBA) has made comments relating to the upcoming federal budget and its relationship to building recovery in a May 5 statement.

MBA Chief Economist Peter Jones explained that residential building recovery is certainly underway. However, it’s important that key decision makers don’t rest on their laurels when it comes to ongoing recovery and improvements in the sector.

Sydney is certainly an area to watch, given that the capital city is tipped for a population boom and has grappled with rising house prices for many months now. While existing homeowners and investors have reaped the rewards, first time buyers have felt the pressure.

For instance, median house prices in the city climbed to $642,000 at December 31, according to Residex’s State Market Report for New South Wales for the December 2013¬†quarter.

A total of 45,412 homes were sold in the state capital alone last year, with growth levels consistently at the top of national trends. Capital growth of units was strong, with weekly rents getting ever-closer to house rents.

With demand for property clear, some industry commentators are saying more needs to be done to address the housing issue in Sydney.

More approvals are promising, but the question is whether they can keep up with demand, which is sure to rise as the population increases over coming months, years and decades.

“Building Approvals data highlight the importance of the Federal Budget boosting business confidence as a key priority, in addition to providing a pathway to structural budget repair,” noted Mr Jones.

Mr Jones also pointed out that residential building recovery is “in line with expectations”.

“Builder’s optimism about the strength of the upturn is reflected by the fact that building approvals are up 20 per cent seasonally adjusted through the year,” he explained.

However, careful policy analysis and economic management is required, according to this industry commentator.

“Nonetheless, the slight retreat in [home buyers’] confidence over recent months is concerning and could be weakened by unduly regressive Budget initiatives,” Mr Jones stated.

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