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- Demand for housing has remained strong, which HIA’s Tim Reardon says suggests the boom in home building will be sustained throughout 2022
- “There has been a clear shift towards lower density housing during the pandemic and this trend does not appear to show signs of slowing,” Mr Reardon says
- The industry will continue to operate at capacity until 2022, limited only by the availability of land, labour and supplies, according to the report
- The impact of the loss of migration is yet to fully impact demand for housing and a rise in interest rates will mark the end of this COVID building boom, Mr Reardon says
The Housing Industry Association (HIA) is forecasting the current boom in home building to cast a shadow into 2022.
“Demand for new detached and multi-unit housing has remained strong, suggesting that the current boom in home building will be sustained throughout 2022,” HIA Chief Economist Tim Reardon said.
HIA released its economic and industry Outlook Report for Australia today, which forecasts new home building and renovations activity for Australia and each of the eight states and territories.
“Demand for new detached home construction has remained strong because of economic lockdowns,” Mr Reardon added.
“There has been a clear shift towards lower density housing during the pandemic and this trend does not appear to show signs of slowing. This shift is not just those in units moving to detached housing but includes a shift to fewer people per household. As a result, we have seen a significant change in the volume, type and location of new homes.”
Demand for new detached houses remains robust, according to leading signs of demand.
“Sales since the end of HomeBuilder (April 2021 – October 2021) are the strongest they have been since 2017 when over 115,000 detached homes commenced construction,” Mr Reardon said.
“This strong level of home building activity suggests that the current boom in residential construction will be sustained throughout 2022.”
The impact of migratory loss has yet to be completely reflected in demand for detached housing, and an increase in interest rates will signal the end of current COVID construction boom, according to Mr Reardon.
Mr Reardon said the shift to lower density is also the likely driver of recent demand for multi-units.
“Approvals for multi-units were 34.3 per cent higher in the September 2021 quarter than the same quarter a year earlier,” he said.
“This is being driven by both medium density housing and high-rise apartments. Investors are looking through the haze of the pandemic to a brighter outlook on the other side. Affordability constraints are also pushing households, particularly first home buyers, back to townhouses and apartments.”
The industry will continue to operate at capacity until 2022, limited only by the availability of land, labour, and supplies, according to the report.
“The COVID pandemic has had a material impact on key drivers for housing demand including density, location and type of housing,” he said.
“It is anticipated that the COVID pandemic will see fewer homes built in Sydney and Melbourne over the decade than was previously forecast. All other regions benefit from this shift in location of housing.”