To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Business information analysts at IBISWorld estimate that industry revenue is forecast to grow by 15 per cent over the next year to reach almost $1.5 billion.
Building societies have grown their asset bases significantly over the past five years, and the favourable lending conditions of the recent low-interest environment have allowed industry participants to build up their assets, according to the report.
“When the tide turns and interest rates start increasing, the industry stands to reap large benefits,” it said.
IBISWorld general manager Daniel Ruthven said an increase in interest rates, which is possible in the next year, will significantly boost the revenue generated on the current and future asset base of the sector.
“We are witnessing revenue per enterprise grow exponentially, but the overall industry is shrinking as societies are acquired by banks and credit unions, and as smaller societies seek mergers with larger players,” Mr Ruthven said.
By comparison, the mortgage industry is expected to grow by 9.6 per cent in 2014/2015 to $81 billion.
Over the past five years, mortgage lenders have significantly increased their residential mortgage portfolios in line with growth in demand for dwellings around the nation, particularly in the capital cities.
IBISWorld has identified this increase as being driven by favourable lending conditions, declining interest rates and a suite of government assistance packages designed to help boost demand for residential property.
“For many, the Australian dream of the quarter-acre block still exists,” Mr Ruthven said.
“While most will be enjoying a smaller acreage, faith in owning a home remains strong across a broad range of Australian demographics, including new migrants and members of Generation X trying to get into the property market,” he said.