Housing Construction Eclipses Records


Construction on new houses will hit a record high this year, however, there are concerns this boom could be short-lived.

The latest forecast from the Housing Industry Association reveals construction on 130,000 detached homes is expected to start in 2021, beating the previous record, in 2018, by 10,000.

The positive ground gained for houses this year, predominantly in regional areas, was in stark contrast to the multi-unit sector.

Demographic shifts and HomeBuilder boosted this number however land constraints will limit new builds according to HIA.

The drive for new homes, particularly from first home buyers, is expected to stretch into 2022 before things take a turn for the worse.

HIA chief economist Tim Reardon said the boom in detached home building will not continue.

“The record year has been facilitated by HomeBuilder, low interest rates and a significant shift in population,” Reardon said.

“We anticipate that all of these trends will move against home building in 2023 along with the impact of the loss of overseas migration.”

The graph shows the number of detached houses is expected to drop to 145,000 in 2022, 143,00 in 2023 and increase back to 160,000 in 2024.

House, multi-unit home building forecasts

^Source: HIA Economics

Supply chain impacts construction sites

The report was a key piece of information for speakers at the Master Builders Australia national leaders summit along with supply chain issues for construction industry.

Minister for Housing Michael Sukkar said the industry is now facing the challenges of having too much work as HomeBuilder hits 85,000 well above the initial 27,000 estimates.

“The $25,000 grant goes a lot further in a regional area than it does in a capital city.

“We're talking about building capacity in regions where it has not been before and job opportunities.

“So following the worst recession the globe has seen for 100 years we will see the highest number of detached houses built this year,” Sukkar said.

Shadow Minister for Housing Jason Clare said the data also shows a drop in work when the effects of HomeBuilder dry up which could easily be addressed.

“Given all the pressure on timber prices—and even getting timber—one obvious thing the government could do now is extend the timeframe under the HomeBuilder scheme for construction to commence.

“That will help to even out demand and provide more work next year when work is expected to dry up,” Clare said.

Clare said house prices are expected to keep rising however stagnant wages are only adding to housing affordability issues.


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