Fall in houses being built will lead to rises in rents Email Printer friendly version Normal font Large font Jessica Irvine Economics Correspondent July 8, 2008
Advertisement A SLUMP in home building is expected to push up rents and force more people to consider buying cheaper homes further from the city.
Construction across the nation in June declined for a fourth consecutive month. Freestanding house building was the weakest sector, a survey of 120 construction firms by the Australian Industry Group and the Housing Industry Association has found.
Separate figures from the Bureau of Statistics show NSW residents are being particularly hard hit. Approvals to build houses in NSW are at their lowest level since records began in 1983.
A property analyst at BIS Shrapnel, Angie Zigomanis, said NSW had a housing shortage of 31,000 properties. "That means there are more people squeezed into fewer dwellings. There are more share households and more kids living at home than would otherwise be the case."
BIS Shrapnel predicts rents will rise 35 per cent over the next three years, and that house prices will rise 10 to 15 per cent.
Mr Zigomanis said that for the same outgoings renters could move out by two or three suburbs and buy a house instead of renting. "You'll probably see a lot of people start to think about doing that."
The chief economist with the Hosting Industry Association, Harley Dale, said double-digit rent rises and sluggish house price growth, which he expected to continue, were changing the rent or buy equation.
"There is probably a group of households out there that might get into home ownership quicker over the next year or so if we have a relatively stable house price environment rather than the fast growth we were getting," he said.
"I guess the flipside is that it's harder to go to the bank and get credit because of the subprime fall. It does appear as though lending criteria [have] been tightened."
Low-income earners would be hardest hit, Mr Dale said.
"I think there is little doubt that we have got quite a serious social problem out there that's not just going to go away in the next six months."
