Boom year for new home construction
This year is shaping up to be a boom year for housing construction with 130,000 new detached homes to commence in 2021 according to the most recent forecast contained in HIA’s economic and industry Outlook Report.
HIA’s chief economist Tim Reardon said the 130,000 new homes forecast in 2021 surpassed the previous record of 120,000 starts in a calendar year which was set in 2018.
“We can clearly see that HomeBuilder has delivered, all leading indicators show a record volume of detached homes about to commence construction and this is occurring in almost every location across Australia,” Mr Reardon said.
“This has not only secured the employment of the 500,000 people employed in detached home construction, but it will also absorb tens of thousands of workers from across the rest of the economy.”
The report has highlighted that it is the regions which have shone through with the Warrnambool region seeing a 47 per cent increase in starts, Ballarat 28 per cent and Geelong a 12 per cent increase in starts.
“Regional locations in many states are showing a larger increase in activity than capital cities as the population moves away from inner city living,” Mr Reardon said.
Villawood Executive Director Roy Costelloe said these numbers are good for the industry and keeping everyone buoyant.
“The thing about land sales is that it’s the start of the food chain,” Mr Costelloe said.
“We make sales, build the blocks of land and in the next nine to 12 months the house building starts.
“All the starts made in 2021 will reflect sales the year before, the 2021 land sales will be reflected in the builds that start in 2022.
“We’re very grateful, without the first home buyer grants and HomeBuilder, we’d have been in trouble if there was a construction lockdown.
“That would have caused the economy to collapse, instead, these incentives have given buyers confidence and the economy is going quite well, although we are very sorry for hospitality workers.
“The thing is, we don’t want sales to go at frenzied pace, it’s better to go at a consistent level,” Mr Costelloe concluded.
Mr Reardon said the extension of HomeBuilder in November is the primary cause of this significant upgrade in their forecast, but there are also demographic shifts driving demand for detached homes.
“The strong conditions for detached homes are in stark contrast to the outlook for multi-units, which will continue to cool,” he said.
“The loss of overseas migration hit the multi-unit sector immediately and the number of new unit starts is falling rapidly.
“The constraint on building more than 130,000 detached homes this year will be the availability of residential land.
“Land development slowed in 2020 when the restrictions were introduced and will limit the number of homes that start construction this year.”
The report also showed detached starts in Victoria increased by 8.7 per cent to 10,138 in the September 2020 quarter, up from the 9,324 recorded in the June 2020 quarter.