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$vuetify.icons.faPhone1300 650 620

SA home building outperforming largest states

Media release

SA home building outperforming largest states

Media release
“The outlook for new home building in South Australia is brighter than for the larger states to the east,” stated HIA Executive Director, Stephen Knight.

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

“South Australia has seen rapid population growth, both from overseas and from New South Wales and Victoria, thanks to its relatively more affordable land and numerous employment opportunities,” added Mr Knight.

“This will create significant demand for new housing in the coming years.

“The trick is for policymakers to allow the industry to meet this demand. The shortage of housing across Australia is due to numerous market failures stemming from government intervention into the market.

“While less constrained than in the larger states, the recent re-acceleration of land prices in South Australia illustrates the underlying shortage of shovel ready land and the need for new land to be fast-tracked for residential development.

“Governments must ensure sufficient infrastructure to accommodate all levels of housing density and address local resident and Council objections and obstacles to such development.

“It is also crucial that this infrastructure is funded fairly, not disproportionately and increasingly through developer charges. These costs are inevitably borne by the home buyer in the form of higher prices and scarcer housing.

“The South Australian Government has taken positive steps in this regard with its Housing Roadmap and commitment to clear and transparent information through a land supply dashboard that includes tracking of infrastructure provision. This includes a plan to ‘share’ responsibility for funding of the provision of water infrastructure across government, existing water users and developers (the cost of which is transferred to land purchasers).

“Higher density housing development, close to jobs and transport, also needs to do much more heavy lifting, not just in the largest eastern states capitals. Unfortunately, activity in this sector is constrained by policy.

“Commencements of multi-units in South Australia in 2022/23 were down by 60 per cent on the 2017/18 levels, with the situation compounded by the material and labour cost blowouts and interest rate rises of the last few years. These constraints on multi-units and preference for detached housing are expected to delay any significant return of interest in higher density living until later in the decade.

“There is significant upside potential in this sector, if policymakers address the constraints on the industry.

“This means abolishing the punitive taxes imposed on the very investors that are so crucial to building higher density housing. These taxes perversely cost tax revenue in terms of lost construction activity, productivity and economic growth.

“The Australian government must streamline visas for in-demand trades so projects can be completed on time and on budget, otherwise projects, especially large apartments, will struggle to even commence.

“As the situation currently stands, underlying demand would support much greater home building volumes, if policy were to permit it,” concluded Mr Knight.

Detached houses: South Australia commenced construction on 2,360 detached houses in the first quarter of 2024, a relatively strong performance and up by 11.4 per cent on the previous quarter. A 9.9 per cent decline is forecast for the June Quarter 2024, to 2,120, producing a financial year total of 8,650, 7.3 per cent down on the previous financial year. A further decline of 4.9 per cent to a trough of 8,220 is forecast in 2024/25, before heading back up to 9,390 by 2027/28.

Multi-units: South Australia commenced construction on just 430 new multi-units in the first quarter of 2024, up by 22.3 per cent on the weak previous quarter. Another 41.2 per cent increase to 600 is forecast for the June Quarter 2024, producing a financial year total of 2,500. This would be up by 34.1 per cent on the 20-year low from the previous year, continuing upwards to more than 2,900 by 2027/28.

Click here to download our HIA State and National Outlooks

For more information please contact:

Stephen Knight

Executive Director - South Australia

Tim Reardon

HIA Chief Economist
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