 The Australian Financial Review, December 18, 2007, Page 5, Adrian Rollins
Declining house number starts are expected to force up rents and maintain pressure on inflation and interest rates according to economics correspondent Adrian Rollins, writing in The Australian Financial Review of December 18.
He said just-released official figures showed the 37,647 residential starts in the September quarter were 1.3% higher than the June quarter, but down 0.8% on the September quarter of 2006.
Concerns were now raised that demand was outstripping the rate at which homes were being built. An already tight rental market could experience rises above 6% a year as a result.
The story said 25,356 houses were started in the quarter, 4% down on the same period a year ago, but apartment starts were up 5.5% for the quarter and up 6.6% for the year.
Across the states, the rates of starts were mixed – up by a seasonally adjusted 6.6% in Victoria, 6.5% in NSW and 2.3% in South Australia. They were down 8.1% in Western Australia and 1.6% in Queensland.
Altogether 151,418 homes were started in the year under review, well short of the 180,000 the industry said was needed.
Master Builders Australia chief economist Peter Jones was quoted as saying interest rate rises, and speculation of more increases, were helping to delay any recovery in the rate of construction.
The prospect of between 155,000 and 160,000 new starts for 2008 would go nowhere near meeting the shortfall.
And BIS Shrapnel managing director Robert Mellow reportedly said 2007-08 starts would be flat or, at best, up by 1%.
He said the existing 1% vacancy rate for rental properties – compared to an ‘in-balance’ figure of 3% - meant tenants could expect substantial rental increases over the next three or four years.
He put the figure at between 7% and 10% a year for the eastern states.
Housing Industry Association chief economist Harley Dale was quoted as saying low rates of affordability were a major restraining factor. Policies addressing this including low cost rental housing and planning could help spark a recovery but a major turnaround ‘wouldn’t happen overnight.’ | 
