Strength in building approvals confirmed

“Bolstered by a 3.9 per cent rise in October, the number of dwelling approvals remains at record highs with the strong pipeline of work to keep builders busy well into 2016,” Peter Jones Chief Economist of Master Builders Australia said.

“Master Builders expects the high level of approvals to translate into 220,000 starts this financial year taking the cumulative total to more than 600,000 in three years, for an increase of 30 per cent on the previous three years,” he said.

“The surge in new supply coming on stream will work to eat into the large housing shortage accrued in the previous decade due to underbuilding.  The unfortunate reality however is that even more supply is needed to address the nation’s supply demand imbalance and improve housing affordability,” Peter Jones said.

“Despite the current cyclical rebound in new dwelling construction, supply side reform must be front and centre of the policy agenda.  In that respect, Master Builders welcomes Treasurer Scott Morrison’s support for the Government’s National Competition Policy reforms, particularly in the areas of regulation and planning and zoning,” he said.

“With the Government soon to release its MYEFO report, it is important to remember the critical role housing investment is currently playing in supporting growth as the economy struggles to rebalance in the wake of the mining boom.  Given its strong multiplier effects and employment flow-on benefits, the housing industry can continue to drive economic growth next year, but the Government must be careful not to spook new home buyer intentions with talk of changes to negative gearing or piecemeal tax reform,” Peter Jones said.