17/03/2010 - 09:18

New dwelling starts surge in Dec qtr

17/03/2010 - 09:18

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The strongest quarterly increase in new home starts in eight years has highlighted the effectiveness of the federal government's stimulus package, but economists warn that not enough new homes are being built to accomodate a rapidly growing population.

New dwelling starts surge in Dec qtr

The strongest quarterly increase in new home starts in eight years has highlighted the effectiveness of the federal government's stimulus package, but economists warn that not enough new homes are being built to accomodate a rapidly growing population.

New home starts nationally rose by a seasonally adjusted 15.1 per cent to 40,022 commencements in the December quarter of 2009, the biggest quarterly increase since 2001, according to Australian Bureau of Statistics data released today.

The result builds on an 11 per cent jump in the September quarter, and in the year to December 2009 total dwelling commencements rose by 26 per cent, seasonally adjusted.

The median market forecast was for a 6 per cent rise in dwelling commencements in the December quarter.

Dwelling starts in Western Australia climbed 2.3 per cent in the December quarter, New South Wales recorded a 16.5 per cent surge, Victoria jumped 15.6 per cent, Queensland increased 13.4 per cent and South Australia climbed 8.7 per cent.

CommSec economist Savanth Sebastian said while the December quarter results are encouraging, data across calendar 2009 paints a different picture.

"Over 2009 dwelling commencements posted the weakest calendar year result in 13 years - a clear sign that we are still under building, especially given that population is growing at the fastest pace in 40 years," he said.

"The anecdotal evidence suggests that many developers are still finding it difficult to get access to funding and despite current activity in the housing industry going gangbusters, new enquiries for building are drying up.

"But the good news is that the current level of building should support economic activity over the coming year and have multiplier effects across the economy.

"Governments of all forms should be actively encouraging more activity by investors in the housing market as well as looking to break down the cost, planning and administrative barriers faced by developers."

Housing Industry Association (HIA) chief economist Harley Dale said the December quarter surge in new starts illustrated the effectiveness of the government stimulus in the second half 2009.

"The strong recovery in housing starts to date highlights the success of targeting policy towards new home building, which is what happened with the tripling of the first home owner grant for new dwellings," Dr Dale said.

Dr Dale said the government's housing initiative was supporting growth in other residential building and predicted there would be a healthy recovery in housing starts in the 2009/10 financial year.

He said a second stage of the recovery could be threatened a widespread lack of available finance and re-emerging land and labour shortages.

The federal government's first home buyers grant was tripled to $21,000 for new homes and doubled to $14,000 for existing properties in October 2008 before being wound back over two stages to a $7,000 for both categories as from 1 January this year.

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