The NSW home-building industry is set to roar back to life with as many as 8000 more homes built a year as a result of this month's changes to first home owner rules, new forecasts say.
BIS Shrapnel is lifting its forecast of NSW home building from the present dismally low 25,000 a year to nearer 40,000 by the middle of the decade. It says as many as 8000 extra houses a year will be built as a result of the changes to the first home owner grant in the second O'Farrell budget.
The $7000 grant previously available to all first home owners was axed on October 1. In its place is a $15,000 grant available only to first-time owners who buy newly built homes worth up to $650,000.
''We can see what's likely to happen by looking at what happened last time buyers of new homes were given special treatment,'' a BIS Shrapnel associate director, Kim Hawtrey, said.
In 2008, during the global financial crisis, the federal government boosted the grant for first owners who bought new homes to $21,000. Just over a year later it fell back to $7000.
''Before the boost, around 10 to 15 per cent of Australia's first home owners bought new homes or units,'' Dr Hawtrey said. ''First home buyers usually prefer to buy existing houses and units because they are more affordable and there are more of them. It takes something special to push the proportion buying newly-built homes above 17 per cent.
''But following the 2008 Commonwealth boost, the proportion shot up to a remarkable 39 per cent.
''The Commonwealth has shown NSW the way. If this happens in NSW, we will see a surge in new home buying and a resurgence of an industry which has been in recession since 2004.''
Can you tell me how far away from the cow he is standing?
Victoria certainly had a surge in construction when they offered a higher FHOG for new builds, and NSW is following in those steps at exactly the time we are likely to see our lowest rates since the sixties.
I think that Shadow might be right, mainly due to luck, but right nevertheless. An over supply of housing though will moderate prices, so it's not all bad for the bears.
The potential catalysts I have always given for the construction boom are as follows...
Peter Fraser-my argument that the RBA is going to pump residential construction as much as possible simply speaks to their lack of alternatives.The export side(apart from mining ) has been hammered by the dollar and once the mining construction boom fades there is a huge hole in employment and GDP.The RBA can pray for a Chinese stimulus to push ore and coal back up-but absent that, it has to be residential construction because there is nothing else.They would be being negligent if they were not looking hard at it.Equally they would be negligent if they ran up another bubble.Rocks and hard places I suggest.
Terry believes that the RBA will force increased housing activity through an extended period of low interest rates. Borrowers are about to be rewarded, and savers are about to be punished. In particular the RBA wants to maintain employment through increased home building, and they will do that until the mining boom starts again, or until they are forced to increase rates to combat inflation.
The construction industry employs a lot of people. Whether Governments both state and federal will put policy in place to aid that is yet to be determined, but regardless the RBA seems determined to press ahead with this. Whether we get another rate cut in November will probably tell us how serious they are.
Terry believes that the RBA will force increased housing activity through an extended period of low interest rates. Borrowers are about to be rewarded, and savers are about to be punished. In particular the RBA wants to maintain employment through increased home building, and they will do that until the mining boom starts again, or until they are forced to increase rates to combat inflation.
The construction industry employs a lot of people. Whether Governments both state and federal will put policy in place to aid that is yet to be determined, but regardless the RBA seems determined to press ahead with this. Whether we get another rate cut in November will probably tell us how serious they are.
Like it or not, Terry is probably correct.
Yes, I think he is correct, however low rates on their own would tend to feed into existing house prices rather than new dwellings, were it not for the government policy working alongside to direct activity towards construction - i.e. the revised home building grants, rezoning and removal of red tape etc.
Plus, I think if house prices (rather than construction activity) surge too much the RBA will lift rates again.
Terry believes that the RBA will force increased housing activity through an extended period of low interest rates. Borrowers are about to be rewarded, and savers are about to be punished. In particular the RBA wants to maintain employment through increased home building, and they will do that until the mining boom starts again, or until they are forced to increase rates to combat inflation.
The construction industry employs a lot of people. Whether Governments both state and federal will put policy in place to aid that is yet to be determined, but regardless the RBA seems determined to press ahead with this. Whether we get another rate cut in November will probably tell us how serious they are.
Like it or not, Terry is probably correct.
Yes, I think he is correct, however low rates on their own would tend to feed into existing house prices rather than new dwellings, were it not for the government policy working alongside to direct activity towards construction - i.e. the revised home building grants, rezoning and removal of red tape etc.
Plus, I think if house prices (rather than construction activity) surge too much the RBA will lift rates again.
I agree, which is why I suggested to Terry that the policy mechanism to push construction isn't in place to take maximum advantage of the low rates, but perhaps he thinks that the government is a bit shy to initiate any policy, so in that case the RBA will have to drive rates even lower to compensate.
Interesting isn't it?
Any expressed market opinion is my own and is not to be taken as financial advice
South Australia will offer an $8500 grant to anyone building a new home in a bid to stimulate the state's flagging construction sector.
Premier Jay Weatherill says the new grant will apply until June next year and will be available to all people who build a new home, not just first home buyers.
"This new grant will provide an urgent boost to the state's housing construction industry and help stimulate the property sector," Mr Weatherill said.
"As a government, we need to put in place measures to give confidence to the industry and get more South Australians buying or building a new home."
According to recent statistics, the number of new homes built in South Australia fell by 18 per cent last financial year.
"The property market is soft and the housing construction industry is doing it tough," Mr Weatherill said.
The housing shortfall in NSW has gone beyond a crisis with 140,000 additional homes needed by 2016, the Fair Trading Minister, Anthony Roberts, said.
Launching the fourth edition of the Tenants' Rights Handbook today Mr Roberts said the extent of the housing shortage was brought home to him at the weekend when he passed a line of prospective tenants queued around the block to view a one-bedroom unit in an old three-storey brick apartment complex.
“This is the reality,” he told guests at the State Library for the launch of the handbook. “We need 140,000 additional roofs over people's heads in a hurry. This is a problem that will require a whole-of-government solution.”
Julie Foreman, chief executive of the Tenants' Union of NSW, told guests that statistics show 30 per cent of NSW dwellings are now rented – the highest figure since 1958.
I hope he ran that past the relevant ministers is all.
These guys tend to get carried away when they have to do something as minor as launch a handbook, open a school hall, or give a speech to the local view club......, so like to embellish their speeches to make themselves seem more important.
They should try to stick to their own portfolios however, and its not like there's nothing left to do in the regulation of real estate agents.
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
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