The Housing Industry Association (HIA) has issued a warning about the negative effects of overregulation in the housing sector.
On Thursday, the HIA published it’s the Winter 2017 National Outlook report, which examines the downturn in building activity that began in March 2016.
The report forecasts the length and depth of the cycle, predicting that in the next three years activity will “bottom out” in 2019, despite maintaining solid levels.
The report also highlighted the importance of foreign investment to the housing sector and Australian economy, warning about the impact of new restrictions and regulations.
“The housing sector has already stepped back from its role driving the Australian economy and now is not the time for governments to hit the industry with punitive charges,” said Tim Reardon, HIA’s Principal Economist.
“Government interventions into the market so far include: state governments imposing punitive Stamp Duty charges on foreign investors, Federal charges for foreign investors, a new set of visa rules that could slow overseas migration, restricting lending to domestic investors and new regulations limiting interest only lending.”
The Chinese government has also imposed restrictions that are already having an effect on home building in Australia.
Reardon points out that foreign investors have invested billions in the construction of new residential dwellings, with new housing stock easing pressure on rental markets.
But he believes that governments of all jurisdictions should exercise caution before imposing any new punitive measures on this sector.
“Foreign capital is highly mobile and if it is forced from the market rapidly it could accelerate the downturn in the sector unnecessarily,” Reardon said. “There is a risk – if uncoordinated and poorly considered policies are introduced to curb foreign investment – that the decline in activity in the sector will be accelerated,” he concluded.
According to the HIA, its National and State Outlooks are Australia’s most comprehensive housing report cards. These reports include forecasts of new dwelling construction volumes, policy updates, databases, and analysis of global and domestic economic issues.