End of NSW’s housing ‘reign’ is ‘within sight’

The HIA Housing Scorecard is a biannual review of the residential building conditions across Australia set against 14 indicators, including the size and hours worked by the construction workforce, new home approvals, housing finance and dwelling transfers.

Measured on a scale of 14 to 112, NSW scored 94 in the winter 2017 scorecard, down by 3 points over the previous semester but reflecting an overall steady momentum.

Victoria fell by two points to 85 but is primed for resurgence in 2018, unless first home buyers in NSW “step up to the plate in coming months”.

“NSW may have retained the top spot however the slowdown in apartment construction provides every reason to expect that Victoria, which has had fewer apartments in the pipeline, may take over the top spot in 2018,” said Tim Reardon, HIA principal economist.

In NSW, first home buyers have been “hard to find” due to poor affordability. HIA said that should they continue to enter the market; the “record” supply of new apartments could clear the market quickly and fuel another round of investment.

However, the market will need to contend with a March quarter 2017 drop of 17 per cent in building activity as a result of a “significant” fall (-20.2 per cent) in unit investment.

HIA said higher numbers of first home buyers in Victoria were a factor in the southern state’s growth. “With strong employment numbers and solid Gross State Product, there is every reason to expect that the population will continue to move to the (marginally) more affordable Melbourne and continue to drive demand for new houses and units.

“The renovations market in Victoria has also been strong due to high turnover in established dwellings, rising prices and an ageing housing stock.”

State by state

Queensland received 65 points in the winter 2017 scorecard (down by seven points), while ACT reached 64, marking a loss of three points.

Tasmania surged ahead by 17 points, jumping up three places on the housing scorecard with a result of 63 points, while South Australia received an extra two points, bringing its total to 58.

Western Australia received an extra five points, making 38 points and the Northern Territory fell by nine points to 37.

For Queenslanders, increasing value of approved renovation work is a “very positive sign” of consumer and industry confidence in the market. As for the ACT, according to the HIA the “only thing” preventing it from taking out the top title is the house price boom in Sydney and Melbourne.

“Strong employment growth leading to very low unemployment levels, real wage rises and population growth has driven the market in the ACT.”

As a result of strong domestic tourism and demand for agricultural products, economic growth in Tasmania is “outstripping” the national average and building activity in Tasmania may still be yet to peak. “The consequence of solid economic growth rates has been demonstrated through an increase in the population growth rate leading to rising house prices and the highest rental price inflation in the country.”

The outlook isn’t as sunny for South Australia, with the report remarking: “Appearing sixth on the HIA’s Scorecard is perhaps the best that South Australia will achieve for a number of years.” It noted that the issues afflicting the state are “far more structural” than cyclical, pointing to high unemployment, low construction investment and falling confidence.

The economy in Western Australia is “set to improve” as appetites for agricultural products such as protein and feed grain reach a record level in Asia and the 2017 March quarter marked a 4.1 per cent increase in building activity.

“At the very least, this looks like the point of inflexion on the curve for the Western Australian economy and we should not expect Western Australia to spend long at this end of the HIA Scorecard.

The Northern Territory is predicted to receive the lowest marks for the remainder of the year, following a “slow slide” from the top spot in 2012.

“The Northern Territory placed last across several residential building metrics. These were: renovations expenditure, non-FHB home loans and turnover in established houses, approvals and commencements for multi-unit dwellings, units under construction and dwelling transfers. The multi-unit side of the market appears to be performing particularly poorly. With almost all of the relevant indicators showing below average outcomes for the decade it is no surprise that the NT has collected last place.”

[Related: Deloitte sees ‘storm clouds’ for NSW property market]