This article is from the Australian Property Journal archive
BUILDING forecasts for regional Australia are split between “boom or bustâ€, according to BIS Shrapnel.
In its new Regional Building 2013-2015 report, the forecaster said population growth will drive building booms in some key pockets around the country, but some localities will experience a “dramatic drop” in dwelling commencements due to public sector cutbacks and the cooling mining sector.
The report identified both the top and bottom 20 regional areas for building growth in the coming years.
The list of those with strong building activity prospects is led by the Coffs Harbour-Grafton area, expected to see a 52% rise.
BIS Shrapnel associate director Kim Hawtrey said home building in the region dropped after the GFC, as it did in many similar places, and there was now an undersupply of homes. Building activity would be revert to pre-GFC levels in 2013/14 and beyond.
“It has an older age profile, with a media age of 44 compared to 38 across the state as a whole, and has a significant lifestyle and retiree component to demand,” he added.
Locations also on the New South Wales North Coast in a similar situation include Richmond-Tweed, set to see building grow by 24%, and Newcastle-Lake Macquarie, by 19%.
Hawtrey said continued strong economic activity would boost home construction in Queensland regions such as Wide Bay and Toowoomba, expected to see growth of 16% and 12% respectively.
“The Wide Bay region lies just above the Sunshine Coast and includes the major regional cities of Bundaberg, Gympie, Hervey Bay and Maryborough. The region is a lifestyle location with tourism being a key industry in the local economy,”
Western Australia had a strong presence in the top handful of locations, with a focus on the south-west corner of the state.
These were led by the Wheat Belt, forecast to grow by 29%, Esperance, by 27% and Bunbury, also by 27%.
Hawtrey said these locations included a number of manufacturing operations as well as a local tourism industry and a lifestyle component of demand, with a new rail link to Mandurah promising to open up the region.
Residential building had fallen in recent years as tourism and manufacturing industries were troubled by the stronger dollar, and property markets had weakened post-GFC.
“Looking ahead, the contraction appears to have bottomed and we expect to see growth in dwelling commencements return, with multi-residential style dwellings in particular improving from extreme lows,” Hawtrey said. “Low interest rated, a friendlier exchange rate, and improving confidence will drive increased building activity,”
However, it is a different story elsewhere in the state. The cooling mining sector is expected to drag down construction activity in resource regions such as the Pilbara, which is set to contract by 36%, and the Kimberley. By 22%.
At the heart of the mining boom, the Pilbara had enjoyed a significant investment pipeline that drove strong employment and population growth. Residential building is expected to peak at over 1,500 new dwellings in 2012/13 through Karratha, Port Hedland and South Hedland. However, BIS Shrapnel expects that from this “unsustainable” level there will be “heavy declines”, albeit with activity remaining high by pre-boom standard.
The ACT is expected to suffer from significant public sector cutbacks and a high 32% reduction in dwelling commencements is expected, whilst much of Tasmania is expecting declines of up to 30%.
In Victoria, areas that have been hit recently by factory closures will see a drop in home building, namely Geelong and Hume, both expected to see falls of 11%.
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