{{ propApi.closeIcon }}
Our industry
Our industry $vuetify.icons.faArrowRight
Economic research & forecasting Economics Housing outlook Tailored market research Economic reports & data Inspiring Australia's building professionals Business & digital Products & innovation Projects HOUSING Online The only place to get your industry news Media releases Member alerts Submissions See all
Business support
Business support $vuetify.icons.faArrowRight
Become an apprentice host Hire an apprentice Why host a HIA apprentice? Apprentice partner program Builder & manufacturer program Industry insurance Construction legal expenses insurance Construction works insurance Home warranty insurance Tradies & tool insurance Planning & safety solutions Building & planning services How can safety solutions help you? Independent site inspections Solutions for your business Contracts Online HIA Tradepass HIA SafeScan Advertise jobs Trusted support & guidance Contracts & compliance support Professional services Industrial relations Member savings Toyota vehicles Fuel savings Handy pay See all
Resources & advice
Resources & advice $vuetify.icons.faArrowRight
Building it right Building codes Australian standards Getting it right on site See all Building materials & products Concrete, bricks & walls Getting products approved Use the right products for the job See all Managing your business Dealing with contracts Handling disputes Managing your employees See all Managing your safety Falls from heights Safety rules Working with silica See all Building your business Growing your business Maintaining your business See all Other subjects COVID-19 Getting approval to build Sustainable homes See all
Careers & learning
Careers & learning $vuetify.icons.faArrowRight
A rewarding career Become an apprentice Apprenticeships on offer Frequently asked questions Study with us Find a course to suit you Qualification courses Learning on demand A job in the industry Get your builder's licence Continuing Professional Development (CPD) Find jobs
HIA community
HIA community $vuetify.icons.faArrowRight
Join HIA Sign me up How do I become a member? What's in it for me? Mates rates Get involved Become an award judge Join a committee Partner with us Our initiatives GreenSmart Kitchen, bathroom and design hub Get to know us Our members Our people Our partners Support for you Charitable Foundation Mental health program
Awards & events
Awards & events $vuetify.icons.faArrowRight
Awards Awards program People & Business Awards GreenSmart Australian Housing Awards Awards winners Regional Award winners Australian Housing Award winners 2023 Australian Home of the Year Enter online Industry events Events in the next month Economic outlook National Conference Events calendar
HIA products
HIA products $vuetify.icons.faArrowRight
Shop @ HIA Digital Australian Standards Contracts Online Shipping & delivery Purchasing T&Cs See all Products Purchase NCC 2022 Building codes & standards Economic reports Hard copy contracts Guides & manuals
About Contact Newsroom
$vuetify.icons.faTimes
$vuetify.icons.faMapMarker Set my location Use the field below to update your location
Address
Change location
{{propApi.title}}
{{propApi.text}} {{region}} Change location
{{propApi.title}}
{{propApi.successMessage}} {{region}} Change location

$vuetify.icons.faPhone1300 650 620

Industry update

Industry update

Record low interest rates and generous support for home buyers culminated in exceptionally strong demand for residential building in 2021. So strong was this demand that it has tested the limits of the industry’s capacity. By the end of 2021 there was a record number of new detached houses under construction in Victoria.

The peak in demand for residential building coincided with major supply chain disruptions. The availability of skilled workers was hampered by COVID-19 outbreaks and border closures meant labour shortages could not be mitigated by interstate or overseas migration. Businesses are also being squeezed by rising costs for building materials and higher international shipping and landside freight costs.

Supply bottlenecks have caused widespread delays in the build process. It is now common for homes that would ordinarily have taken eight months to build, to take over a year to complete. However, the greater challenge facing the industry relates to the escalation in costs.

The vast majority of residential building contracts in Victoria are ‘fixed-price’ and there is very limited scope for builders to pass on these higher costs. While builders allow for variations in input prices, the speed, scale and breadth of the price rises has been very significant.

Delays in industry activity mean there is a large backlog of work. The industry will continue to operate near capacity through 2022/23. New home sales have slowed from the HomeBuilder peak and stabilised at a level that is around 24 per cent higher nationally than the same period in 2019.

The existing pipeline of residential building work will sustain a healthy level of activity heading into 2023, however the new phase of the economic cycle has started to bite. The Reserve Bank of Australia began the interest rate tightening in May and borrowing rates are widely anticipated to rise further over the months ahead. Rising interest rates will weigh on housing market conditions and on demand for new residential building over the next term of government.

New home starts in Victoria are expected to decline from an estimated 65,400 in 2021/22 to around 51,800 in 2024/25. The slowing in activity will primarily be driven by a decline in detached house construction as the market recedes from the recent record high.

The level of home building activity will rise and fall with the ebbs and flows of economic cycles. However, Victoria’s demographic profile implies a need to maintain a strong supply of new homes in order to provide a range of housing options that meet the community’s needs.

Improving the supply of housing must be a priority for an incoming Government.

Fiona Nield

Regional Executive Director - Victoria

For further information contact:

Fiona Nield
Executive Director, HIA Victoria
03 9280 8200
f.nield@hia.com.au
#housingvictorians #housingaffordability

Authorised by Fiona Nield of the Housing Industry Association Limited, 584 Swan Street, Burnley Victoria.