Powered by MOMENTUM MEDIA
subscribe to our newsletter

HSBC says housing construction boom is ‘near its peak’

Five years after housing construction started to fill the gap of declining mining investment, HSBC believes national housing supply is now close to being worked off.

In his Downunder Digest report, released this week, HSBC Australia and New Zealand chief economist Paul Bloxham notes that while there are some signs of oversupply in in Melbourne, Brisbane and Perth, Sydney still appears to have an undersupplied unit market. Meanwhile, the detached housing market does not appear to be over-supplied.

“The housing construction boom is now near its peak. Building approvals have fallen sharply in recent months,” Mr Bloxham said.

“Importantly, though, given the lag between approvals and completions – which has been elongated by the large number of high-rise apartment buildings under construction – and the large stock of work-yet-to-be-done on approved dwellings, we do not expect construction to start falling until late 2017,” he said.

“Like ships passing each other in the night, we expect housing construction to start falling around the time that mining investment stops its decline.”

Advertisement
Advertisement

According to Mr Bloxham, Australia’s investment outlook is then expected to be supported by mine maintenance and repair, infrastructure investment and the business investment needed to support services exports, such as tourism and education – Australia’s next growth engine.

“Having added housing supply, we expect house price growth to slow in 2017,” he said.

“Oversupply of apartments in Melbourne and Brisbane could see price declines in those markets. However, having not built many detached houses in recent years, we think that any apartment market shake-out is unlikely to spill over to the detached market.”

[Related: Apartments drive rebound in dwelling approvals]

HSBC says housing construction boom is ‘near its peak’

PROMOTED CONTENT


>In his Downunder Digest report, released this week, HSBC Australia and New Zealand chief economist Paul Bloxham notes that while there are some signs of oversupply in in Melbourne, Brisbane and Perth, Sydney still appears to have an undersupplied unit market. Meanwhile, the detached housing market does not appear to be over-supplied.

“The housing construction boom is now near its peak. Building approvals have fallen sharply in recent months,” Mr Bloxham said.

“Importantly, though, given the lag between approvals and completions – which has been elongated by the large number of high-rise apartment buildings under construction – and the large stock of work-yet-to-be-done on approved dwellings, we do not expect construction to start falling until late 2017,” he said.

“Like ships passing each other in the night, we expect housing construction to start falling around the time that mining investment stops its decline.”

According to Mr Bloxham, Australia’s investment outlook is then expected to be supported by mine maintenance and repair, infrastructure investment and the business investment needed to support services exports, such as tourism and education – Australia’s next growth engine.

“Having added housing supply, we expect house price growth to slow in 2017,” he said.

“Oversupply of apartments in Melbourne and Brisbane could see price declines in those markets. However, having not built many detached houses in recent years, we think that any apartment market shake-out is unlikely to spill over to the detached market.”

[Related: Apartments drive rebound in dwelling approvals]

HSBC says housing construction boom is ‘near its peak’
mortgagebusiness

Latest News

A high rate of loan repayments through the pandemic has somewhat slowed the growth of Heritage Bank’s book, despite a surge in approvals. ...

Small and medium-sized enterprises were the most commonly targeted victims of cyber attacks in the last financial year, according to new rep...

An overwhelming majority of Pulse Credit Union members have supported the proposed deal with Teachers Mutual Bank Ltd, with the two companie...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.