THE defining characteristic of the housing market today is that investors are being replaced by first home buyers, according to HIA’s Principal Economist Tim Reardon.
HIA recently released its National Outlook for 2018, which discusses the building activity cycle.
“The supply of new housing is now closer to meeting the demand for housing than at any time since 2003,” Mr Reardon said.
“The enormous pent-up demand for housing in east-coast metropolitan areas is finally being met by a record supply of new apartments.
“The boom in apartment building has already started to calm but with population growth remaining high, buoyed by strong overseas migration, we expect that demand for housing will remain at elevated levels for the next few years.
“Investor activity in the housing market is continuing to cool as a consequence of punitive taxes and regulatory imposts on investors, but they are being replaced by first home buyers who have entered the market off the back of state government incentives.
“Government interventions into the market recently include: state governments imposing punitive Stamp Duty charges on foreign buyers, federal charges for foreign purchasers, a new set of visa rules that could slow overseas migration, restricting lending to domestic investors and new regulations limiting interest only lending.
“HIA is forecasting that building activity will decline modestly – from record highs – over a number of years, consistent with typical cyclical trends in the industry, activity will bottom out in 2019 with activity still at solid levels.”