The investors abandoning the Australian housing market are being replaced by first home buyers, according to the Housing Industry Association (HIA).
According to the HIA’s National Outlook for 2018, some of the factors affecting building and investment activity in Australian housing include:
- State governments imposing punitive Stamp Duty charges on foreign buyers
- Federal charges for foreign purchasers
- New visa rules that could slow overseas migration
- Restricting lending to domestic investors
- New regulations limiting interest only lending
But while investor activity in the housing market was found to be cooling as a result of these and other factors, demand for housing is expected to remain elevated, due to more first home buyers entering the market off the back of state government incentives.
HIA principal economist, Tim Reardon, said that while building activity has been in a downturn since March 2016, the supply of new housing is now closer to meeting the demand for housing than at any time since 2003.
“The enormous pent-up demand for housing in east-coast metropolitan areas is finally being met by a record supply of new apartments.”
“The boom in apartment building has already started to calm but with population growth remaining high, buoyed by strong overseas migration, we expect that demand for housing will remain at elevated levels for the next few years.”
Mr Reardon added that building activity is forecast to decline modestly from its record highs, bottoming out in 2019.