A recession in Australia has become more likely but it should be over relatively quickly according to leading economists. Respected BT Chief Economist Chris Caton indicated that the chances of a recession had clearly increased as the global financial crisis deepened. But he predicted the economy would start to recover next year led by the share market which he said had been sold out excessively and said “was way too cheap”.
The Federal Government is still hopeful that the economy will not move into significant recession, despite the fact that “Australia is facing the biggest upheaval since the Great Depression” according to the Treasurer Wayne Swan. However, Mr Swan is of the view that the Federal Budget will not be in deficit and output growth will remain positive. In Queensland, our commodity exports are expected to hold up in Australian dollar terms in the coming months, a remarkable achievement due to the huge increases these commodities have enjoyed in recent months – Queensland’s mineral price index has risen more than 50% in the last 6 months.
With our population growth nearly double the national average due mainly to interstate migration and with lower interest rates and first home owner’s grants offered by the Federal Government it is reasonably expected that Queensland’s housing industry and therefore the demand for timber should recover reasonably quickly in the early New Year.
The HIA speaking at a recent outlook breakfast in Brisbane noted the number of loans for construction in new building purchases in the September quarter of 2008 in Queensland were 38% lower for the same period of the previous year. HIA believe that housing starts will drop by 12% for this current financial year 2008/09 to 38,690 but will improve to a further 5% for 2009/10 and a further 7% in 2010/11.
Renovations however will continue to grow with the 2008/09 forecast 7% higher than 2007/08 with growth of 3% for 2009/10 and a further 7% for 2010/11. This puts the value of investment in renovations in Queensland at $7,794 million for 2008/09 growing to $8,590 million in 2010/11.
Housing affordability is also set to improve with housing prices in Brisbane dropping by 5.2% in the September quarter but only down 2.1% on an annual basis.
This means that Timber Queensland members may have to batten down the hatches over the Christmas and early New Year period but all the signs of long term increase in activity are there for the future. With steel prices rising significantly up around 100% this will assist our industry going forward. – Timber Queensland’s Timber Talk