A prominent industry economist has urged the federal government to show more leadership on housing supply and policy reform, or risk a downturn in Australia’s economy.
Harley Dale, chief economist at the Housing Industry Association (HIA), says a strong focus on housing supply and policy reform is vital to future economic and social prosperity.
“Australia will fail to achieve this objective without federal government leadership and involvement in housing policy reform, including strategic planning for the future housing and residential infrastructure requirements of our growing and ageing population,” Mr Dale said.
He said tinkering with negative gearing and capital gains tax provisions “does not represent real reform”, and risks damaging confidence in the sector at a crucial time in the property cycle.
“A key finding in the latest HIA National Outlook [report] is that a peak in new home building activity will be followed by a significant cyclical downturn extending to 2017-18,” Mr Dale said.
New dwelling commencements are forecast to decline from a record peak of 220,000 in 2015 to around 160,000 in 2017-18, while the growth in residential property prices will continue to slow, according to the HIA.
“The national new home building sector has made an outstanding contribution to overall economic activity in Australia over the last four years,” Mr Dale said.
“Without this contribution from residential construction, the domestic economy would have been considerably weaker than has turned out to be the case over recent years.”