For decades, the Australian economy has been driven by the boom in the mining sector, which lifted Australians' income and living standards, and lowered unemployment. It also had a knock-on effect on the housing sector: With more money, Australians were better able to afford their own properties.
However, since this boom has begun winding down, many have been wondering where the country's next economic driver will come from, and whether the slowdown in mining would be reflected in the housing sector. Will buying property in St George or Carlton be more fraught from here on?
If the latest report from BIS Shrapnel, titled Long Term Forecasts 2015-2030, is to anything to go by, this fear so far appears to be unjustified. While the report notes there was a slight decline in growth in the June quarter, it expects this to rebound over the September and December quarters. Perhaps more importantly, it also noted that the property sector has held up despite these stresses.
"[T]he recovery in dwellings investment is now well entrenched," assured Richard Robinson, associate director of economics at BIS Shrapnel.
According to the report, a shortage of housing stock combined with expectations of continued low interest rates has led to a significant jump in the construction of housing. It predicts a further 18 months of this strong building activity, particularly in New South Wales. The report also expects alterations and additions activity to see improvement over the same period.
The findings of the report will soothe any investors who were concerned about the direction of the Australian housing market, which has slowed somewhat over the past few months. The fact that investment in residential building still has momentum means the market – and the Australian economy – has some steam in it yet.