Housing construction market recovery stalled
20/12/2011 
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The residential housing construction slump is likely to last longer than initially predicted, with property developers now saying that building activity will probably not pick up for at least another few years.
The Building Industry’s Leading developers last year were hoping for an improvement in the residential housing market by late 2007 or early 2008.
But they face the reality that the recovery will not happen until at least 2009.
Leighton Holdings deputy chief executive Dieter Adamsas predicted a flat housing market for almost three to four years, as the firm looked for residential development acquisitions.
Lend Lease Corp told analysts it expected the east coast residential market to remain soft for another 18 months before gradually recovering.
“Lend Lease is predicting a peak in the cycle by 2010,” a Merrill Lynch analyst report said.
The report said that Lend Lease expected the worst was over in New South South, but recovery will be slow because of low housing affordability.
BIS Shrapnel senior analyst Jason Anderson said the consensus forecast in June 2006 predicted there would be 157,000 dwelling approvals for 2007 compared with 149,000 for 2006.
But now the forecast for 2007 was 152,000 dwelling approvals, with only a lift the following year to 161,000.
Mr Anderson said that although the forecast was higher for 2008, it was doubtful approval numbers would reach those levels.
“We don’t think it will be that high (for 2008),” he said.
“We underestimated the downturn in New South Wales. I don’t think anyone was expecting it to be this bad.”
Many forecasters were caught out by an unexpected interest rate rise in May last year, Mr Anderson said.
Major residential construction companies were not facing hardship amid the conditions because many were diversified.
However, Mr Anderson said property developers had to evaluate how substantial the expected upturn was likely to be.
The upturn was expected to peak around 2011 to 2012.
In July last year, CSR’s outgoing managing director Alec Brennan said the company expected a recovery in the residential housing market some time in calendar 2007.
Investa and Mirvac had said earlier this year that a recovery in the residential market would not happen before 2008.
In February Stockland managing director Matthew Quinn said he expected the soft housing market in New South Wales to improve towards the end of 2007.
“The number of building improvals has actually increased,” Mr Quinn said.
“Queensland is still very positive and New South Wales is starting to pick up in the inner (city) ring.”
Source: AAP
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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