Welcome from Sydney
Good Morning, Build-it readers; today, we are updating live from the HIA Sydney Construction Outlook Breakfast, part of the HIA-Colorbond Steel Housing 100 launch week event series.
A whose-who of industry decision-makers, home building leaders and Australia’s leading construction news platform, Build-it, have come together for a morning of insight and up-to-date analysis of conditions in the residential and non-residential industry.
What is the Sydney Construction Outlook Breakfast?
The 19th Annual Sydney Construction Outlook Breakfast remains the most prestigious event for New South Wales’ building and construction sectors. It offers attendees the latest insights into both state and national construction industries, while also providing a broader analysis of the economic landscape. With expert commentary and data-driven analysis, this breakfast is a must-attend for industry leaders and professionals looking to stay ahead of market trends and challenges.
The Hon Anoulack Chanthivong MP
Minister for Better Regulation and Fair Trading, Anoulack Chanthivong MP, addressed the audience emphasising the government’s commitment to more than just legislative improvements.
He highlighted the collaboration with the construction industry to ensure its profitability while also delivering much-needed housing for New South Wales and Australia’s growing economy.
His message underscored a proactive approach from the government, focusing on fostering a thriving and sustainable construction sector.
When will interest rates come down?
Lucy Ellis, Chief Economist at Westpac Group, delivered an economic outlook for Australia, highlighting that global disinflation is progressing, but the Reserve Bank of Australia (RBA) remains cautious about the country’s unique economic situation.
While inflation has significantly decreased, Ellis explained that the RBA aims for further reduction before feeling confident.
Although no immediate interest rate cuts are expected, she predicted that the RBA might begin reducing rates by February next year if economic conditions align with expectations. However, we are unlikely to see mortgage interest rates return to immediate pre-covid levels for quite some time.
What’s driving the housing crisis?
Lucy Ellis shared further insights on Australia’s housing market during her economic outlook.
She emphasised that the population surge is driving rent growth, particularly driven by global migration resuming after pandemic-induced slowdowns.
Ellis noted that while house prices are rising in major capitals, Hobart remains flat due to lower overseas migration interest.
The trend of smaller household sizes in Australia’s capital is also contributing to increased housing demand.
She also highlighted the backlog in home building, driving construction cost escalation, and called for policy changes to simplify building codes and accelerate new projects.
Negative gearing reform
HIA Chief Economist Tim Reardon addressed the issue of negative gearing reforms, stating that such changes won’t make housing more affordable.
He highlighted the equity challenges faced by first home buyers, particularly those under 35, due to a range of macro restrictions.
Reardon also pointed out that government restrictions and increased taxes on large-scale foreign investors have hindered construction rates in Australia, particularly in major cities, despite these homes benefiting overall supply.
He also expressed doubt about reaching a 250,000 net migration growth target in the next few years, further intensifying housing demand.
HIA-Colorbond steel Housing 100
Reardon recapped the HIA-colorbond steel Housing 100 report revealed yesterday at the Melbourne Construction Outlook event.
Award-winning new home builder Metricon Homes again picked up the top spot for the ninth consecutive year, retaining its title as Australia’s largest residential builder.
Metricon Homes reported 3,894 new home sales across four states during 2023/24 despite a market slowdown in demand due to the rise in interest rates.
In second place, with just 13 fewer home sales, was ABN Group, with stronger market conditions in Western Australia and growth in Victoria, seeing ABN rise up the ranks with 3,881 homes.
Meriton Apartments rounded out the top three with 3,291 starts shared across New South Wales and Queensland. This was a jump from fourth place last year.
This year’s results were the tightest in the report’s 35-year history, with HIA chief economist Tim Reardon anticipating more new homes would be built towards the latter end of this financial year.
“Market confidence is returning to the new home market as interest rates remained on hold for the tenth consecutive month. Low levels of unemployment and strong population growth have driven ongoing demand for new homes despite the increase in the cost of borrowing and a decline in household consumption,” he said.
