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A record year of housebuilding is underway, driven by a combination of HomeBuilder and low interest rates, a new report has found.
The Housing Industry Association’s (HIA) latest Economic and Industry Outlook report revealed one of the biggest years for detached housing commencements, with more than 146,000 detached housing starts set to have taken place in the 12 months to September 2021.
This is more than 20 per cent higher than the peak of the previous boom in 2018, according to HIA economist Angela Lillicrap.
“This level of activity is not likely to be seen again for many years, if not decades,” she said.
“The combination of factors that have led to this boom is unprecedented and are driven by HomeBuilder and low interest rates as well as a change in consumer preference away from high-density areas.”
Over the 2020–21 financial year, a record level of 137,170 detached housing construction will commence. It’s 34.2 per cent than the previous financial year and almost 17 per cent higher than the peak of the previous boom in 2018.
Across the next financial year 2021–22, HIA expects around 121,000 starts, which could be the third-strongest year on record.
According to Ms Lillicrap, the pipeline of work will ultimately ensure a high level of activity within the industry until at least the second half of 2022.
“Renovation activity is also at an all-time high and likely to remain elevated for a number of years due to the nature of the COVID recession and house price growth,” she noted.
In contrast with detached housing construction commencements, multi-unit starts are expected to decline over 2020–21, Ms Lillicrap said.
Looking ahead, the economist expects the increased demand for supply of materials, labour and land to be the key challenge for the industry, but the extension of HomeBuilder’s commencement deadline may help limit the impact of constraints and ensure the sustainability of the current pipeline.
However, these forecasts could still be impacted by the timing and speed of the recovery of overseas migration, Ms Lillicrap did flag.
“If overseas migration returns sooner, or faster, than anticipated, then the trough of 93,500 new housing starts in 2023 will not be as deep as is currently forecast,” she said.
“Equally, if the restrictions on skilled migration continue into 2022, the depth of the emerging slowdown in new detached starts will be exacerbated.”
At the end of the day, stable and certain population growth will be critical to stable economic growth, Ms Lillicrap concluded.
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