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Residential construction was a key source of growth for several state economies during 2013/2014, according to the Australian Bureau of Statistics.
ABS findings showed that the Northern Territory experienced the biggest growth in total dwelling investment, up 39.4 per cent, and expanded its gross state product (GSP) by a nation-high of 6.5 per cent.
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Dwelling investment also increased in South Australia by 13.3 per cent and Western Australia by 11.1 per cent, while both states’ GSP rose by 5.5 per cent and 1.3 per cent respectively.
New South Wales experienced a 5.6 per cent rise in dwelling investment, while Queensland grew 4.0 per cent and Tasmania witnessed an increase of 0.4 per cent. All three states increased their GSP by more than 1.0 per cent.
The ACT and Victoria suffered a decline in dwelling investment by 9 per cent and 0.1 per cent respectively in 2013/2014, although both states increased their GSP by 0.7 per cent and 1.7 per cent.
Housing Industry Association economist Diwa Hopkins said the results show the important role that new homebuilding and renovating is starting to play in the growth of state economies.
“The very low and stable interest rate settings characterising the current cycle are having the desired effect of realising much pent-up demand for new home building,” she said.
However, Ms Hopkins said there is still a way to go in addressing entrenched housing shortages, and that policymakers need to understand that supply constraints can only be held at bay by low interest rates for so long.
“The effects of excessive taxation and restricted land supply are stifling the industry’s ability to respond to increases in demand,” she said.
“The issues require all levels of government to take action and the coming federal reviews on taxation and the federation are the obvious starting point to make real progress.”
[Related: More homes is good news for brokers]
