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“This has driven a ‘super cycle’ of housing activity across Australia that will ensure that the industry continues to operate at capacity through 2022. Detached home building activity remains well above historical peaks.
“The key feature that will mark the turning point in this cycle will be a rise in interest rates. When interest rates inevitably increase, it will reduce households borrowing power. Slower house price growth will see banks increasingly reluctant to lend for the construction of a new home and have a negative effect on consumer confidence.
“Regardless of the timing of an increase in the official cash rate, effective interest rates have started to rise and will lead to the same outcomes.
“Inflationary pressures are very evident in the home building industry where the cost of land, labour and materials are increasing at rapidly. These rising costs have not yet had a significant adverse impact on demand for new homes, as established house price growth has exceeded these cost increases.
As established house price growth slows and access to finance tightens, these rising costs will further impede demand. The adverse impact of slower population growth for two years will also emerge as weaker demand for new detached homes from 2023.
“Despite this slowing in demand for new homes over the coming years, if the national economy remains strong and unemployment low, the bottom of this next cycle will not be sharp, deep or sustained.
“It is expected that the number of detached homes commencing construction will slow through 2022/23 and reach pre-COVID levels at the end of 2023.
“In contrast to the detached forecast, multi-unit starts are expected to continue to increase over the next two years, but remain below pre-COVID levels of activity,”
The affordability constraints in detached housing are expected to push some households into townhouses and apartments. A return of migration will assist in offsetting the impact of a rise in interest rates for multi-unit construction,” concluded Mr. Reardon.
HIA released its economic and industry Outlook Report for Australia today. The Outlook Report includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories.
The Housing Industry Association (HIA) says the Victorian results in the HIA National Housing Accord Update released yesterday, while not as poor as some other states, highlight the urgent need for a reset in housing policy after the upcoming state election.
HIA’s annual Safety Summit is being held today in Adelaide (8 October) and will bring together industry leaders, regulators and workplace safety experts, providing practical guidance to help residential builders and tradies create safer worksites and support compliance in an ever-changing world.
The Housing Industry Association (HIA) is calling on the Australian Taxation Office and Federal Government to reverse the decision to cease accepting credit card payments from 30 November, warning the change needs to be viewed against the cumulative financial pressure already confronting residential building businesses.
“Housing commencements rose in the year to June 2026, but the latest data reflects yesterday's market, not the conditions facing builders today,” stated HIA Executive Director Victoria, Keith Ryan.