According to the peak housing body, historical data indicates that Australia’s housing sector might stimulate the economy’s next round of growth.
The Housing Institute of Australia published a research note this week that highlighted the “strong historic linkages” between new home building and general economic conditions. Home building both creates direct employment, and it also triggers expenditure on household appliances, which in turn, generates economic activity and dwelling price growth, the note said.
The institute said that new home building “bottomed out” in 2012 but then made its largest contribution to GDP growth in almost a decade in 2013, a trend that is said to continue.
With housing starts forecast to grow over the coming two to three years, household consumption, at the behest of new home building, appears on track to improve and play a greater role in an emerging non-mining economic recovery.
The institute also said that the federal budget would benefit government reduced “excessive” taxes on new housing.
That would trigger construction of more housing, which in turn would make housing more affordable and reduce demand for Commonwealth housing assistance, according to the institute.