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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) is pleased to see the announcement for action on red tape and approvals made by Minister for Housing Homelessness and Cities Clare O’Neil. “The burden of regulation related to building, planning and approvals is adding cost, and delays which is impacting our ability to supply the homes we need”, HIA’s Managing Director Jocelyn Martin said today.
“The Housing Industry Association (HIA) is pleased to see housing feature prominently at this week’s Economic Reform Roundtable particularly on cutting excessive red tape and streamlining environmental approvals, but as Treasurer Jim Chalmers has indicated more work is needed on easing housing construction,” said HIA Managing Director, Jocelyn Martin.
“As an industry association whose members are embedded in the Hunter and Mid North Coast communities, HIA welcomes the $50 million Housing Support Package announced by the Albanese and Minns Governments,” said HIA Hunter Executive Director Craig Jennion.
“The Housing Industry Association (HIA) welcomes today’s announcement by the Albanese Government in providing $300 million to support Australia’s future wood supply to meet increasing housing needs across the country,” said HIA Managing Director Jocelyn Martin.