pace of home construction could create pressure | Liverpool City Champion


New construction figures show that home construction remains at a breakneck pace, although the sector could face challenges with high demand putting pressure on the supply of shops and materials.

Housing Industry Association economist Tom Devitt expects such challenges to persist until the housing market slows towards the end of the year.

The Australian Industry Group / HIA construction performance index fell 0.8 points, but at 58.3% in May, it still indicates the industry is comfortably in expansionary territory.

Within this framework, the construction of houses stands at an index of 62.8.

“The volume of fieldwork continued to increase in May,” said Mr. Devitt.

“Extending HomeBuilder start-up times will see new home construction levels stay high for longer.”

The federal government’s HomeBuilder grant program officially ended in March, but it has since extended the deadline to start construction by 12 months.

Speaking to senators on Wednesday evening, Reserve Bank deputy governor Guy Debelle said increasing housing supply may help restrain housing prices.

Building permits for single-family homes hit another record in April.

“There is going to be strong growth over the rest of the year,” said Dr. Debelle.

“The increase in supply limits the rise in prices.”

Meanwhile, the central bank and other regulators continue to monitor developments in Australia’s booming real estate market, but at this point, they are confident lending standards have not come down.

House prices rose again in May and are now 10% higher nationally compared to the previous year.

“We’re paying attention to rising house prices, sure, but it’s more about loan growth,” said Dr Debelle.

RBA Deputy Governor Michelle Bullock said at the hearing that the central bank is working closely with the banking regulator, the Australian Prudential Regulation Authority, to monitor the housing market.

“At the moment, we believe the lending standards are not relaxed,” she said.

“Because the interest rates are low, it is easier for people to pay off their loans.”

The hearing was told that the increase in home loans is primarily aimed at homeowners, and largely first-time buyers, but investor loans have started to pick up from a very low level.

Separately, APRA Chairman Wayne Byres told the hearing that the last time the regulator intervened in the market, interest-only investor loans were running at 40% of all loans made, but that was quickly cut in half.

But he said there was no intention to intervene at the moment.

“There is little point in trampling on early home buyers trying to enter the market,” he told senators.

When asked if there was a threshold where APRA would step in, Mr. Byres said no because you have to look at the environmental context at the time.

“I’ve always resisted a simple rule because I think it causes you to make bad choices,” he said.

Associated Australian Press

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