The housing productivity myth

Housing Investment as a Share of GDP

Let us conclude with some drier economic statistics. New housing investment directly contributed more than $68 billion to Australia’s GDP in 2007/08. Housing also has a very large “multiplier effect”, which is estimated to be 2.9 times by the ABS:

“For every $1m spent on construction [broadly defined] output…a possible $2.9m in output would be generated in the economy as a whole, giving rise to 9 jobs in the construction industry (the initial employment effect), and 37 jobs in the economy as a whole from all effects.”

Of course, this data simply captures investment in new housing. The ownership of these assets is constantly changing over time as families move through the life-cycle. In total, the value of all established and new home sales in Australia averages just shy of $250 billion per annum.