Housing construction is expected to hit a record high in 2021, however there are some concerns that the coming boom may quickly end.
The Housing Industry Association (HIA) has forecast construction on 130,000 detached homes in 2021. This beats the previous record, set in 2018, but 10,000 houses. The bulk of these houses are being built in regional areas.
The HIA believe that demographic shifts and the HomeBuilder grant are behind this recent push in construction. However, the body warns that land constraints will limit new builds, which may hamper first home buyers. 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
However, this growth is not without issues. The HIA report was a hot topic for the speakers at the Master Builders Australia national leaders summit, as it highlights the oncoming supply issues the industry is expecting to have.
Minister for Housing, Michael Sukkar, said at the summit that the industry is now facing the challenges of having too much work. His looked at the HomeBuilder grant for this: HomeBuilder hit 85,000 applications, 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. … following the worst recession the globe has seen for 100 years, we will see the highest number of detached houses built this year.”
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 added that house prices are expected to keep rising however stagnant wages are only adding to housing affordability issues.
If you’re planning on building, we recommend getting your foot in the door as soon as possible – or holding off for a little while – in order to beat the supply/demand issues that are oncoming.