Apartments drive predicted home building boom

Those working in the Australian construction industry will be heartened by the news out of analyst and forecaster BIS Shrapnel. 

According to the Building in Australia 2014-19 report, there should be plenty of work in the building industry in the years ahead. The recovery in the building industry is "record-breaking", according to the report, and will continue for another two years, so there should be plenty of concrete cutting taking place in construction sites around the country.

New housing starts nationwide are predicted to reach 190,000 over the next year. This is substantially more than the previous peak that occurred during 1994, when housing starts reached around 187,000.

Tradies will want to note that much of this increase in construction is due to the increasing popularity of apartments. 

"Currently two high-rise apartments are being built for every five detached houses, which is double the historical rate of one apartment for every five houses built," Associate Director with BIS Shrapnel Dr Kim Hawtry said in a July 21 release. 

The New South Wales residential building market in particular is profiting from the upswing in construction. Housing starts are forecast to grow by 9 per cent over the coming year, handily outpacing every other state. The next highest states were Queensland and Victoria, each with 3 per cent growth predicted for their respective residential building sectors. 

What's behind this explosion in building activity? It's Australia's high population growth, says the BIS report, driving the clamour for new housing around the country. 

Coupled with this are the lowest interest rates in 50 years, making mortgages more affordable than ever and allowing more Australians to get onto the property ladder for the first time.

The official cash rate, which sets the benchmark for interest rates, has been kept at the historic low of 2.5 per cent for close to a year now by the Reserve Bank of Australia. Observers are curious to see how long it will stay that way.