Record quarter for detached home builds

Residential construction is full steam ahead despite the industry struggling with labour and material shortages compounded by COVID restrictions.

Figures released by the Australian Bureau of Statistics show the value of work done on detached houses surged in the June quarter to reach the highest level on record, exceeding the previous record set in March.

Housing Industry Association economist Angela Lillicrap said that the ABS released preliminary data on construction work undertaken across all states and territories for the June quarter confirms an elevated volume of work is occurring across all regions.

“The national economy is benefiting from this record volume of work and the boom is expected to continue well into 2022 supporting employment across the sector,” she said.

“HomeBuilder and low interest rates have been a key driver of the record volume of detached home commencements.

“This demand for housing is also coming from a shift in the location of the population and a move to lower density housing.

“The average number of people per house has been falling since the 1980s and COVID may have accelerated this trend.”

The data also reveals that labour shortages and supply chain restraints has led to fewer homes reaching completion in the normal construction timeframes.

The HIA is cautioning that delay in the supply of materials will see the impact on labour and ancillary services remain elevated well into the second half of 2022.

“This is a positive for the wider economy as the economic stimulus is spread over more years, but a challenge for building businesses,” Ms Lillicrap said.

“The shutdown of building activity in some regions will compound this delay in completing new homes.”

Master Builders Victoria have also raised concerns with the effect that building material shortages could have on the industry.

CEO Rebecca Casson said that the MBV is aware that this issue is a very important topic for their members.

“We have been very active on this subject, and while supply chain issues across our state continue to have an impact on the progress of building and construction works, as well as causing an increase in the cost of some materials and trades, it’s important to note that here in Victoria we are not alone,” Ms Casson said.

“Current conditions have seen a reduced capacity in supply chains for building products not only across Australia but overseas as well.

“We also understand from talking to many of our members that the extent of the delays and the cost increases vary greatly, and they depend on the contractor, their suppliers, and their locations – and we know this is a very real problem across our industry.”

COVID has also contributed to the value of multi-unit construction work being well below the levels seen during the previous housing boom in 2018.

The loss of overseas migration and student population have impacted this sector of the market first.

As a result of the low volume of multi-unit construction, the total volume of homes under construction was 0.7 per cent lower in 2020/21 than during the previous financial year and is well down from its peak in June 2018.

The HIA also indicated that a decline in new homes under construction should be anticipated from mid-2022 when homes initiated by HomeBuilder reach completion.