18 Jun Sydney house prices to stop falling by year end
This suggests the state expects the volume of housing transactions to lift strongly when it recovers in a year.
“Expectations for ongoing strong population growth and a stabilisation in house prices from late 2019 should encourage the commencements of more projects,” the budget said.
“How conditions in the housing market evolve over the next 12 months will be important for dwelling investment and household consumption.”
NSW Treasurer Dominic Perrottet is also confident of the impending recovery in the state’s housing market.
In the interim, residential construction has been hit hard.
Dwelling construction is now 9 per cent lower than its mid-2018 high and approvals, particularly for apartments, are expected to continue to fall.
Actual project starts for the state have also fallen. Apartment commencements suffered the most, falling 22 per cent in the final quarter of 2018, compared to the previous quarter.
Mr Perrottet says many of the state’s housing construction workers will find jobs in infrastructure construction with infrastructure spending partially offsetting the drag in housing construction.
“Public investment is expected to contribute half a percentage point per year to economic growth over the next two years … this should bolster employment in construction and its supporting services, including engineers and project managers,” the budget said.
The state also expects more downward pressure on housing rents, which has fallen for only the second time on record in the March quarter, especially given rising vacancy rates.
The state’s vacancies are around 3.5 per cent compared to the housing boom of 2012-17, when vacancy for many areas including Sydney were less than 2 per cent.
The state’s housing developer Landcom has also achieved its target of creating projects for 20,000 new homes in the four years to March, and has also delivered 5 to 10 per cent in affordable housing on all its projects.