The number of households in Australia is projected to rise from 8,196 in 2017 to 9,160 by 2022 with the Australian furniture market expected to reach AUD$14 Billion. This represents a growth of 1.8% during the period. This is good news for the furniture manufacturing and cabinet making sectors.
Ken Research reports that ‘The growth in establishments of economy and luxury hotels in Australia has resulted in increased demand for beds, wardrobes and other furniture. In addition, an inflow of multinational companies into the country has resulted in increasing demand for fully furnished offices and furnishings. More condominiums and residential housing and the opening of many more retail stores as well as increasing the product listing are also driving growth in the market.’
Affordability is a key factor in new home builds and resulting cabinetry and furnishings. “Australia’s record home building boom continues to improve housing affordability,” said Geordan Murray, HIA Senior Economist. The HIA Affordability Index for Australia’s capital cities registered 75.4 in the December quarter of 2018. This is 1.5 per cent higher than in the previous quarter and 3.3 per cent higher than a year earlier. 2018 was the fifth consecutive year where the industry commenced construction of over 200,000 homes and it was a record year in terms of new dwelling completions.
Mr Murray continues, “This strong flow of new housing supply is one of the key factors behind the moderation in price pressures in housing markets across the country, which has ultimately improved housing affordability. The other key factor has been the modest improvement in wages growth. Strong growth in employment over the last two years has boosted demand for workers. We are seeing the early signs that this tightening in the labour market is translating into rising wages. The combination of declining home prices, growth in wages and historically low interest rates creates a situation where the HIA Affordability Index shows that affordability in six of the eight capital cities is more favourable than the 20-year average. Melbourne and Hobart are the only exceptions.”
“Despite the improvement in affordability over recent quarters, housing in Sydney and Melbourne remains far from affordable for average households. We will need to see wage growth continue to exceed home prices in order to restore more appropriate levels of affordability,” concluded Mr Murray. Five of the eight capital cities saw improved affordability over the year to December 2018. Sydney continues to be home to the greatest improvements, its index up by 11.3%. This was followed by +5.9%in Melbourne; +5.7% in Perth, +3.2% in Darwin and +0.8% in Brisbane. Affordability deteriorated by -9.3% in Hobart; -3.6% in Canberra and -3.3% in Adelaide.