Enormous pipeline of work to complete across the construction sector

June 2, 2022 BY

Strong ongoing demand has occurred at the same time as significant constraints on materials, land and labour.

The ABS has recently released preliminary data on construction work undertaken across all states and territories for the March quarter of 2022.

Commenting on the new data, HIA economist Tom Devitt noted that construction work done on new houses in the March 2022 quarter was down by 3.5 per cent on the previous quarter.

“Activity early in the year was held back by the staff absences associated with the COVID-19 Omicron outbreak and the extended leave many Australians took over the summer holiday period,” Mr Devitt added.

“There is still an enormous pipeline of work to complete across all regions.”

The data also shows that at the end of 2021, there were 75.7 per cent more detached homes under construction than pre-pandemic.

The volume of detached homes approved but not yet commenced was also at a record high.

Mr Devitt said that these figures represent not just the HomeBuilder boom, but also the ongoing demand for housing during the pandemic as Australians sought more space and amenity in their living environment.

“As highlighted in HIA’s latest Outlook Report, released yesterday, this strong ongoing demand has occurred at the same time as significant constraints on materials, land and labour.

“This has resulted in rapid increases in the cost of construction and extended construction timeframes.

“This will sustain elevated levels of building activity through to December 2023 and beyond, even with interest rates on the rise.”

The value of multi-unit construction increased by 2.6 per cent in the March 2022 quarter, though this is still well down from the peak of the previous cycle.

“Affordability issues in the detached market, as well as an acute rental shortage and the return of overseas migrants, students and tourists, should increasingly shift demand back towards higher density living,” Mr Devitt said.

“With detached home building remaining at capacity during 2023 and the volume of multi-unit commencements increasing, the shortage of building materials, land and labour will continue to be the main pinch point for the industry.”