HIA has released its latest Economic and Industry Outlook report, which includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories.

“There were just 880 detached houses that commenced construction in the 2023/24 financial year, the weakest year since the ABS began records in 1969/70,” added Mr Weller.

“Land prices are prohibitively high and supply constrained within the ACT for this kind of housing product. This will likely remain a major constraint on buyers, keeping activity in the next cycle below the peaks of previous cycles.

“Nonetheless, demand for lower density housing remains high in the region with many families simply choosing to live across the border in NSW.

“Perhaps it is time for the ACT to rethink its policies around density. If detached housing development is occurring in NSW, but the occupants are effectively Canberrans through their employment, then this negates much of what the ACT policies are trying to achieve.

“It is putting more motor vehicles on the road for longer, and the ACT is also losing revenue from rates, vehicle registration and other taxes to NSW.

“This is why we recently called on the next ACT government to increase the horizon of its Indicative Land Release Program (ILRP) to 15 years, to provide more certainty around the forecast pipeline of shovel ready land.

“The current five years is inadequate for city planning, and there is limited transparency around performance.

“With higher density development doing most the heavy lifting in the ACT, there is some good news with an estimated 3,432 multi-units commencing construction in 2023/24. 

“This represents an increase 27 per cent over the 2022/23 number of starts, though this is tempered somewhat by the fact that last year saw the lowest number of units come out of the ground in a decade.

“Medium density also remains notably absent from the local housing mix. There were 110 semi-detached dwellings approved in the June quarter 2024, which is 0.9 per cent lower compared to the previous quarter and 7.0 per cent lower compared to the same time in the previous year. 

“This leaves semi-detached approvals in the financial year 2023/24 at 560 in total, which is 28.8 per cent lower compared to the previous financial year. 

“This ‘missing middle’ has great upside potential in the ACT, if policy were to support it with more amenable planning system and changes to the current punitive local tax system.

“There has also been a surge in the number of already-approved projects that have stalled before commencement, driven by material cost blowouts and interest rate rises over the last few years, and also the ongoing shortage of skilled tradespeople across the construction sector.

“The underlying demand for housing is clearly present in the ACT, evident in elevated housing prices and still-tight rental markets,” concluded Mr Weller.

Detached houses: The ACT saw 220 detached houses commence construction in the first quarter of 2024, up by 9.0 per cent on the previous quarter. This is forecast to pick up again by 17.1 per cent to 260 in the June Quarter 2024, producing a financial year total of 880, down by 28.5 per cent on the previous year and a new record low for the sector. From this trough, an 18.2 per cent improvement is forecast to 1,040 in 2024/25, continuing to a peak of 1,390 by 2027/28.

Multi-units: The ACT commenced construction on 1,010 multi-units in the first quarter of 2024, up by 35.7 per cent on the previous quarter. This is forecast to moderate back to 690 in the June Quarter 2024, producing a financial year total of 3,430, up by 26.8 per cent on the previous year. These approximate levels are forecast to be maintained, moderating down by 3.5 per cent to 3,310 in 2024/25, before strengthening over the subsequent years, back towards 3,390 by 2027/28.

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