A housing surplus is on the way for Australia by 2017, Goldman Sachs’ Tim Toohey has predicted this week.
 
Toohey, head of macro-research in Australia, added that the surge in housing activity will face a challenge that will need to “normalise interest rates” as demand is weakening.
 
The latest Goldman Sachs report also warned of a slow growth in Australia’s population, where by 2017, there will be 530,000 less people than estimates. Toohey said the growth is more likely to be 1.25% annually.
 
This possible economic crunch led the bank to cut its potential economic growth for Australia from 2.9% to 2.5% during the period of 2015 to 2017.
 
As for the housing sector, the report said dramatic effects are expected with an estimated shortage of 140,000 homes in 2017 into a 75,000 surplus instead.
 
The Financial Review reported that Toohey is a strong advocate of household formation as a key driver of housing demand.
 
In 2012, the bank upgraded its outlook for residential construction because of the emerging undersupply - the largest since the 1970s - as well as the need for a large cut in interest rates.
 
 

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