HIA released its economic and industry Outlook Report for Australia today. The Outlook Report includes updated forecasts for new home building and renovations activity for Australia and each of the eight states and territories.

“There has been a clear shift towards lower density housing during the pandemic and this trend does not appear to show signs of slowing. 

“This shift is not just those in units moving to detached housing but includes a shift to fewer people per household. As a result, we have seen a significant change in the volume, type and location of new homes.” added Ms Nield. 

“Leading indicators show that the demand for new detached homes remains strong and suggests that the current boom in home building will be sustained throughout 2022.

“We believe the industry will continue to run at capacity throughout 2022, constrained by the availability of land, labour and materials. 

“Over the year to September, the price of skilled trades increased by 6.0 per cent in Victoria, while the price of materials as measured by the ABS increased by 10.2 per cent. The price of residential land increased by 14.6 per cent in the 2020/21 financial year. So this has led to an increase in the cost of a new house and land package. 

“But these cost increases have not led to constraints on access to finance, as the cost of an established home has increased significantly faster.

“The impact of the loss of migration is yet to fully impact demand for detached housing and a rise in interest rates will mark the end of this COVID building boom.

“Victoria has seen a significant decline in population due to the lack of overseas migration and an increase in households leaving the state for other regions.

“But affordability constraints seem to have pushed some households, particularly first home buyers back to townhouses.

“Multi-unit approvals in Victoria increased by 22.1 per cent in the September 2021 quarter to be 6.1 per cent higher than the same time last year.

“As a result, the outlook for multi-unit construction in Victoria has improved but remains weak compared to the pre-COVID levels due to the lack of population growth.” concluded Ms Nield.

*HIA’s National and State Outlooks are Australia’s most comprehensive housing report card, encompassing renovations activity, new home building, policy updates, global and domestic economic analysis, and dedicated state and territory housing databases. For further information or for copies of the publication (media only) please contact: Kirsten Lewis on k.lewis@hia.com.au