Construction of new homes to hit record high in 2021

A record number of almost 130,000 detached homes are anticipated to commence construction in 2021, with the Housing Institute of Australia attributing the rise to the take-up of the HomeBuilder scheme.

The previous record of 120,000 detached homes constructed was in the 2018 calendar year, according to HIA Chief Economist Tim Reardon.

This forecast is contained in HIA’s economic and industry Outlook Report. The state and national outlook report includes updated forecasts for new home building and renovations activity for Australia in each of the eight states and territories.

“HomeBuilder has delivered,” Mr Reardon said, adding that all leading indicators show a record volume in construction of detached houses and “this is occurring in almost every location across Australia”.

“This has not only secured the employment of the 500,000 people employed in detached home construction, it will also absorb tens of thousands of workers from across the rest of the economy,” he added.

“The extension of HomeBuilder in November is the primary cause of this significant upgrade in our forecast but the demographic shifts are also driving demand for detached homes.”

With the ability to work from home driving many people away from inner-city locations, he said regional areas in many states were showing a larger increase in activity than capital cities.

“The strong conditions for detached homes are in stark contrast to the outlook for multi-units, which will continue to cool,” Mr Reardon said.

“The loss of overseas migration hit the multi-unit sector immediately and the number of new unit starts is falling rapidly. The population shock is yet to flow through to detached.”

Mr Reardon said a limited availability of residential land would put constraints on building more than 130,000 detached homes this year. 

He noted skilled trades would be in high demand but the slump in apartment construction would lead to more tradespeople shifting to the detached house market.

“The supply chain of building products will be stretched, but many building components are manufactured in Australia, including cement, bricks, plasterboard and timber,” he said, explaining the increase in demand for these products would also create employment opportunities.

Demand for detached houses has been particularly strong from first-home buyers, who currently account for 43 per cent of new home loans.

Despite the surge in demand for detached housing, which was expected to extend into next year as population shifts continue and investors return to the market, Mr Reardon said he did not expect it to stay at these levels beyond the end of 2022.

“This boom in detached home building will not continue,” he said. “The record year has been facilitated by HomeBuilder, low interest rates and a significant shift in population. 

“We anticipate that all of these trends will move against home building in 2023 along with the impact of the loss of overseas migration.”

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Daniel Johnson

Daniel Johnson was the news editor for Elite Agent. He worked with the company from February 2020 to June 2020. For current stories, news alerts or pitches, please email [email protected]