This article is from the Australian Property Journal archive
New housing activity has continued to slow down at the end of last year, according to the Housing Industry Association.
According to the HIA, while housing activity declined at the same time the Australian economy continued to grow below average. However, economic growth remains slightly stronger at the end of 2005 than through the earlier stages of the year.
Gross Domestic Product grew by 0.5% in the December 2005 quarter, ticking annual growth up to 2.7% from the 2.6% pace seen in the September quarter.
The Australian economy grew by 2.5% in 2005 compared to the stronger 3.6% in 2004.
HIA’s chief economist Harley Dale said that investment in housing was easing and that situation was set to continue in 2006.
“Housing activity is cooling, and will cool further for a time yet.
“The pull-back is nowhere near as savage as we have witnessed many times in the past, however, and we expect to see a base start to form in the second half of this year,” he added.
Expenditure on new and established houses fell by 5.1% to $7.3 billion. Expenditure on alterations and additions was essentially flat, increasing by 0.2% to nearly $6.5 billion.
Total housing investment was down by a moderate 2.1% on the December 2004 quarter.
“Provided a stable interest rate environment is maintained, we should see signs of housing activity picking up again by the end of this year.
“The housing industry, even while enduring softer conditions, is still worth nearly 6.5% of GDP which, together with the output and employment linkages to other sectors, reinforces the importance of housing to the Australian economy,” Dale added.
By Kathryn O’Meara
