NEW data released by BIS Shrapnel says the housing market is tipped to finish flat in 2011, with few bright spots

The industry researcher and analyst believes this is indicative of a market that will fall flat as the effects of the government’s stimulus package fade away.

New building commencements grew 15% in 2010 by the company’s estimates, but it has predicted a retraction in the market of 1%.

Interestingly, BIS Shrapnel estimates that there will be a 16% upswing in medium and high-density dwellings, further reflecting an increasing urban population.

In 2009, there was a 25% drop in the number of medium and high-density residential buildings being built, and this year is estimated to be a year of gradual recovery for the sector with a 4% increase in orders.

The main driver of the contraction will be non-residential buildings, projected to fall by 14% in 2011 (despite a federal Treasury estimate of a 7.5% rise).

BIS Shrapnel chief analyst Jason Anderson said this was a consequence of the education project stimulus package winding down but also reflected a slow recovery for commercial and industrial projects, and was part of the reason why developers would gravitate toward apartment projects.

“The overall mix of building and construction activity provides a near-term opportunity for developers of residential projects. Softness in non-residential building should result in more competitive tendering and cost benefits for apartment projects,” Anderson said.

He also said apartment construction in key areas could encourage residential growth as the unavailability of housing had caused stagnation.

“More apartments would help to address housing shortages across Sydney – particularly in Western Sydney, where average population growth over the past decade has been weak on average, due to the lack of new housing.”

New South Wales building is tipped to slow down after high growth this year, with forecasts having building commencement at 3% growth after racing ahead this year with 21% growth.

Non-residential activity is forecast to weaken. Although the value of commercial building is anticipated to rebound from a very low level in 2009-2010, education and health spending are forecast to weaken considerably, as public stimulus winds down.

Western Australia is tipped to be the hardest hit in 2011, with a 14% contraction forecast. Again, this is due to be caused by a non-residential building slowdown.

Health and education construction are both coming off a very high base in 2009-2010, and further weakness in commercial construction is expected.

The big winner in 2011 is due to be the Northern Territory. BIS Shrapnel said residential construction was expected to lift strongly, especially in 2010-11.

New dwelling construction is coming off a low base in 2009-2010, and significant pressure is evident in the Darwin property market.

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