Population growth in Australia has been strong for many years. And while this shows that many people favour moving to Australian shores, it has also pinpointed the need for more housing.
If you've kept an eye on commentary in the media in recent months, you'll have heard of significant price growth in Sydney's market. Some industry bodies have put this down to a supply and demand issue, leading to fast and significant price growth.
Recent comments from the Urban Taskforce note that housing completions in New South Wales have been lagging for some time, fuelling this issue of demand outweighing supply.
"The most important measure is the annual housing completions which have been well below the required 33,200 needed each year," said Urban Taskforce chief executive Chris Johnson.
"This year's completions have risen by 2,400 from the year before and have now reached 22,750. While the increase is welcomed the number of homes completed is still more than 10,000 less than the NSW government's targets of 33,200 a year."
Despite this supply issue for real estate in Sydney, national housing starts and completions have risen sharply in 2014.
Real estate construction to surpass expectations
The Australian Residential Construction Outlook released by the Residential Development Council and RP Data noted building commencements have been strong nationwide throughout 2014. If this activity continues, the council expects that starts will surpass previous forecasts by approximately 30,000 this year. This will give both investors and homebuyers a bigger pool of brand new residential real estate to choose from, while also helping to cool prices in some parts of Australia.
"The good news is that the forecasts for F2015 show residential development reaching 180,000 new starts, which adds tens of thousands of homes for Australian families than on previous years," said Nick Proud, executive director for Residential Development.
What has fuelled this growth?
Many different factors have been dubbed as drivers for this rise in housing starts. The Residential Development Council notes that of these drivers, interest rates for home loans have been particularly significant. The cash rate has been held steady for 13 consecutive months now, which has been the longest period of stability in over a decade.
"A one percent drop can save someone on a $300k mortgage nearly $200 on their monthly repayment - that's a very significant saving," Loan Market director Mark De Martino said in a recent release.
Many new or seasoned homebuyers have taken advantage of these low rates and bought or built property, experiencing great savings and affordability.
