New home building hits highest recorded levels

Nearly 190,000 new homes were built this year, a record for new home building in Australia.

According to the Housing Industry Association’s National Outlook, released today, the construction of 188,000 new homes commenced in Australia during 2014.

The previous record was 187,000, recorded in 1994.

Growth was strongest in South Australia, where new home commencements rose by 20.8% over the 2013/4 financial year, followed closely by Queensland with 20.3% growth over the same period.

Housing Industry Association chief economist Harley Dale said the upward trend was set to continue.

“Record low borrowing costs have combined with other factors such as high net overseas migration to unleash substantial pent-up demand for new housing,” he said.

“These factors will keep the level of new homes commenced at historically elevated levels.”

However, Dale said that the government’s reluctance to regulate and stimulate the industry in light of these low borrowing costs was constraining growth.

“What the economy needs is further growth in new home building over the next couple of years, but that will only occur as a consequence of taxation and regulatory reform.”

While new home commencements have hit record levels, it was a different story for renovations investment, which increased only 0.3% over the 2013/4 financial year following a decade low.

The trend can be attributed to unemployment concerns, a lack of available credit, and an elevated household savings rate.

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