After nearly seven years of decline, housing starts are forecast to rise by 10 per cent next year.
According to BIS Shrapnel residential construction will be a key support for the Australian economy in 2009 however the economic forecaster said this could be greater if the first home owner boost was extended until at least the end of next year.
Much of the increased activity is expected across the detached housing sector, however BIS believes that extending the recent first home owners boost would stimulate apartment development in the second half of 2009.
“Given the current difficulties for developers to get finance for medium or high density unit and apartment development we do not expect them to be in a position to schedule additional construction,” said BIS senior economist Jason Anderson.
Mr Anderson said an extension of the first home owner boost next year would also have greater economic benefits than tax cuts “given the risk that tax cuts could be saved rather than spent”.
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