Record quarter for detached home construction in June

Detached house construction has surged in the June quarter, reaching the highest level on record.

The Announcement:

“Figures released by the ABS today show the value of work done on detached houses surged in the June quarter to reach the highest level on record, exceeding the previous record set in March,” said Angela Lillicrap, HIA Economist.

The ABS released preliminary data on Construction Work undertaken across all states and territories for the June quarter of 2021.

“This elevated volume of work is occurring across all regions,” added Ms Lillicrap.

“The national economy is benefiting from this record volume of work and the boom is expected to continue well into 2022. This will support employment across the sector.

“HomeBuilder and low interest rates have been a key driver of the record volume of detached home commencements. This demand for housing is also coming from a shift in the location of the population and a move to lower density housing. The average number of people per house has been falling since the 1980s and COVID may have accelerated this trend.

“At the same time, fewer homes are reaching completion in the normal construction timeframes are the industry is pushed with access to labour and material shortages.

“The delay in the supply of materials will see the impact on labour and ancillary services remain elevated well into the second half of 2022. This is a positive for the wider economy as the economic stimulus is spread over more years, but a challenge for building businesses.

“The shutdown of building activity in some regions will compound this delay in completing new homes.

“On the other hand, the value of multi-unit construction work undertaken is well below the levels seen during the previous housing boom in 2018. The loss of overseas migration and student population have impacted this sector of the market first.

“As a result of the low volume of multi-unit construction, the total volume of homes under construction was 0.7 per cent lower in 2020/21 than during the previous financial year and is well down from its peak in June 2018.

“Without a return of demand for new housing from overseas migration, HIA’s latest Outlook shows there will be a decline in new home commencements over the next few years. Even with overseas migration re-starting next year, the record volume of new home commencements will reach a natural end point. A decline in new homes under construction should be anticipated from mid-2022 when homes initiated by HomeBuilder reach completion,” concluded Ms Lillicrap.

Source: Housing Industry Association

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