Latest NewsNew Homes on the ReboundSunday, 19 March 2017

A forecast 16 per cent rise in new dwellings in NSW this year will lead national new home construction after buyer activity was dampened by the end of first home buyer grants.

First home buyer numbers fell 50 per cent earlier this year following the scrapping of grants in 2009.

And an increase in investor activity was not enough to offset the drop, leaving house price growth flat-lining, according to the industry analyst's September business report released yesterday.

But, overall, residential property markets rebounded strongly and that had translated into a recovery in demand for new dwellings, BIS said.

A return of new home buyers to the market was needed to sustain any recovery in new dwelling starts.

BIS expects demand to lift moderately again over the next 18 months. It predicts a recovery in first home buyer demand will begin towards the end of 2010 and gather momentum in 2011.

It forecasts a rise in residential national dwelling starts of 4 per cent, much of it concentrated in NSW in the form of medium or high-density projects.

Dwelling construction in NSW was coming off a low base, BIS said. ''In 2008-09, dwelling starts hit their lowest levels since 1953, at just 23,688 homes.''

Dwelling starts were estimated to have risen by 34 per cent to 31,750 dwellings the following year.

In Victoria, a record level of construction last year was marginally above the estimated level of underlying demand, with most of the growth focused in regional areas, BIS said.

This was the result of the 2008 economic downturn being much milder in Victoria.

Over the past year, ''dwelling commencements are estimated to have lifted 27 per cent to 53,350 starts, the state's highest level of construction on record''.

Interest rates, flat since May, were likely to remain that way until March next year. The standard variable rate was expected to rise to 7.8 per cent by late 2011, BIS said.

Tight conditions in most rental markets would provide solid returns, surpassing house prices. ''Depending on the city, rental growth is forecast to average 6-8 per cent per annum over the next three years.''

Melbourne, Sydney, Adelaide and Canberra currently all have vacancy rates below 1.5 per cent.

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