According to Jennifer Duke of Domain, the most recent report of the BIS Shrapnel says that New South Wales (NSW) will be the top home builder of Australia, overtaking Victoria, in 2016. The research released during the company's briefing on Thursday revealed that Victoria is forecasted to achieve its building peak for dwelling commencements by December 2015. By that time, it is estimated that Victoria will move into oversupply and will cause building activity to drop, according to the same report.
Robert Mellor, BIS Shrapnel's Managing Director said that the huge undersupply in Sydney was a factor that keeps the construction outlook strong over the next 18 months. According to him, it is expected that the market will be healthy for the next five to seven years.
"NSW is going to enjoy strong growth in both residential and non-residential building as it is experiencing healthy population growth, has a state government that is making good decisions and they are building the necessary infrastructure, particularly transport to encourage property development," Mellor said.
However, despite the strong building outlook for NSW, this is not to expect that it will have the capacity to ease Sydney's undersupply The latter part of 2016 will mark a peak for Sydney's building cycle which will then begin to ease.
The chief economist of HSBC Australia, Paul Bloxham , warned a national oversupply of homes could be a risk in 2017. "Slowing population growth has begun to raise questions about whether supply could eventually exceed demand, leaving Australia with too many houses," he said. "It is clear that the recent ramp-up in housing supply means the cumulative housing deficit is diminishing. Our estimates see the national housing market in balance by 2017, "he added.
HSBC estimates that Victoria is at most risk of oversupply.
Slower population growth and even stronger construction poses the risk that certain parts of the market may become oversupplied," Mr Bloxham cited.
