Boom and gloom; more housing starts and health beats mining

Boom and gloom; more housing starts and health beats mining – an action packed three minutes reading.

1. Boom & gloom

Welcome to the boom and the gloom.

Australia has everything going for it being an ultra-safe country; transparent democracy; a mining boom; uninterrupted economic growth; limited levels of private and public debt; a high and rising household savings rate; strong links with Asia and a currency that generally behaves itself.

But the average punter still cannot believe their bad luck.

Poor sentiment can be blamed on political wrangling (to put it mildly); uncertainty about new taxes and then there is of course Europe, a shaky share market; that scary notion called “structural change” and the bloody RBA who won’t drop the cash rate.

Whatever the cause, we need to wake up soon.

Paradox of Thrift is what economists call it – we will talk and save ourselves into a recession.

Over half of us believe that the wisest place for savings is in the bank or paying off debt.

Encouragingly real estate is starting to come back into the mix.

There are plenty of good reasons to be looking at property – real prices are stagnant; the jobless rate low; rental markets extremely tight; rents are rising above CPI; interest rates are historically low and the amount of resale stock on the market is now starting to decline.

This will lead – sooner hopefully than later – to a wave of new home buyers entering the market.  Investors are likely to lead the charge.

2. More housing starts

Further to last weekend’s post we anticipate that just 135,000 new dwellings will be built across Australia this financial year.  This is against the ten-year average of 155,000 new homes built each year.

The slowdown is warranted given the drop in overseas migration during 2009 and 2010 and the oversupply of new housing in Victoria, South Australia and to some degree in Western Australia too.

But the recent lift in migration is expected to see new housing starts increase in coming years.  Our forecast is for 155,000 new starts across Australia during fiscal 2013 and up to 175,000 starts during 2013/14.

Forget what you read in the press this week, our forecast is contrary to many other property commentators out there, as we like to drive looking through the windshield instead of the rear vision mirror.

And Queensland looks set to benefit the most.

Also despite recent reports to the contrary, new housing is undersupplied across much of the state.

At present Queensland has a 16% market share of total residential building across Australia.  Our historic average is closer to 25%.  We forecast that new housing starts in Queensland could double (up 46%) over the next two to three years, rising to 38,000 new starts during 2014.

With close to $135 billion worth of new resource projects underway across the state, coupled with $29 billion worth of new infrastructure projects being delivered across the south-east corner of the state, the need for new housing is on the increase.

And much of this new supply – close to 70% – will be needed in the triangle between Noosa, Coolangatta and out to Toowoomba.

3. Health beats mining

When it comes to jobs, the health sector has been the boom sector since the GFC and not mining!

Health added close to 235,000 new jobs over the last four years or 36% of the total jobs created across Australia.  By comparison mining employment lifted by just 110,000, accounting for just 17% of the 650,000 jobs created since 2008 downunder.

Yes 650,000 jobs have been created in Australia over the last four years.  Best maybe to reread item one above.

The aging population means more workers will be required in health care.  Mining might be booming, but the demand for health-related services will be bigger, broader and most likely longer lasting.  A miner and nurse/doctor partner household is the way to go!

Mining only accounts for a quarter of million jobs or just over 2% of the workforce.  The health sector is five times the size of the mining in terms of employment.

Michael Matusik is the director of independent property advisory Matusik Property Insights.  Matusik has helped over 550 new residential developments come to fruition and writes the weekly Matusik Missive.  The Matusik Missive is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.


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Michael Matusik


Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive

'Boom and gloom; more housing starts and health beats mining' have 1 comment


    March 31, 2012 Sonja

    I love reading what you have to say , you are always spot on. I get sick of the media always say the doom and gloom and the negative, just to try and sell papers or make the news . Yes we have had it tough in the last few years. But for every down there is an up. Like you always say this is the property cycle but people forget. Keep up the great work . Sonja


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