Queensland’s outlook, like that of WA, is also promising. The ‘Sunshine State’ has been consistently underperforming across the range of home building indicators since the 2013–2016 home building boom. The state seems to suffer from a crisis of confidence rather than anything fundamental.
Queensland has been successful in attracting thousands of interstate migrants to retire, and despite COVID-19, this trend is likely to continue. Add to this that investment in mining and infrastructure, particularly in the north, is looking to grow again, and the state could give WA a run for its money as the first economy back to growth. Unfortunately, the loss of overseas tourists will impair this recovery and no amount of domestic tourism can offset the loss of international flights.
While the markets in WA and Queensland have been through a boom and bust over the past decade, South Australia remained unremarkable. Stability has been the hallmark of this home building market. Impressively, the state held strong while the credit squeeze pulled down other markets, and overall has defied the volatility of other markets over the past 20 years.
A recent surge in multi-units under construction supported jobs in construction and the wider economy. While the shock to population growth associated with COVID-19 border closures will undermine housing demand and possibly jeopardise many of these jobs, SA does not have as far to fall as some of the eastern states. Larger shocks in the east may even convince some of SA’s interstate migrants to remain locally.
There is a lot of uncertainty regarding the outlook for the residential building market. Changes to government policy and global factors will impact our market in coming years.
Fortunately, Australia had an insurance policy entering 2020. Our public debt situation going into the pandemic gave us the scope to respond with unambiguous strength and purpose to support Australia’s people while getting on top of the virus. The Australian Government’s public debt to GDP ratio was 28 per cent before the pandemic, compared to well over 100 per cent among many of our advanced economy counterparts.
There are few countries around the world that can make the same boast. For this reason, a return of migration, and especially skilled migration, can play an important role in pulling our economy as a whole forward again.