Australian Housing Market Recovery Not Sustainable

Like the current US recovery and many other fast paced economic turnarounds, the Australian housing market is seeing a recovery trend that won't likely hold up.

Vital elements involved with a sustainable growth rate are currently lacking in the New South Wales and Western Australia new homes market. One key element is a focus on housing reform at the governmental level. Experts are saying that the current recovery trend will be cut short at this rate which will only have negative effects on economy, affordability, and buyer confidence.

An 8.3 percent increase in starts last year brought new housing to 157,108, which defied the previous two straight years of declines. This extreme upswing in new Australian housing has economists now projecting a substantial fall in the next year, unless reform or wider recovery trends gain footing.

The Housing Industry Association, who tracks this information, estimated that renovation investments were down 6.6 percent in the 2012/2013 period. But, an increase of 3.5 percent is projected for this current financial year which would bring investments to $1.8 billion short of the record, set in 2010/2011.

As this trend continues, a solution to the decreased affordability and increasing population must be acknowledged for a sustainable growth rate and healthy Australian economy.

How does the new homes market in Australian housing change your perspective on the current real estate marketplace, if at all? Are you seeing similar trends in your area?

We'd love to hear your comments in the comment section below.

Photo courtesy of F.d.W.’s Flickr