Labour shortage, supply constraints drive house commencements to record highs: HIA

Private sector new houses have increased to record highs since March 2021, with 103,124 new private houses under construction in September 2022.

Data further showed that over 104,000 detached houses are still under construction across the country, almost double the pipeline that existed in mid-2020.

During the quarter, there were only 29,153 detached houses completed, just 2.5 per cent up on the same period in 2021. 

Additionally, the number of homes reaching completion remains no higher than those being commenced, with 29,177 new projects started in the September quarter. 

Housing Industry Association (HIA) senior economist Tom Devitt stated that while supply constraints had been the bane of housing projects since 2021, another issue is holding back the completion figure. 

“Materials constraints have plagued builders over the last two years, but the shortage of skilled trades is the number one constraint,” he said.

But the expert also noted that there is an observed slowdown in commencement across housing types, as new house commencements continued to decline in the September quarter with a further 4.9 per cent fall. 

“Commencements peaked in the previous cycle in mid-2021 and are expected to continue to decline into 2024,” he commented. 

Despite the slowdown in the number of homes expected to commence construction, Mr Devitt forecast that the volume of houses under construction would keep Australia’s home builders busy this year. 

In addition to this, Mr Devitt highlighted that the volume of multi-unit dwellings under construction continues to grow as commencements exceeded completions over the 18 months to September 2022. 

“With interest rates increasing rapidly, affordability constraints will push home buyers back towards more affordable, higher density living,” he stated. 

Mr Devitt also pointed out that the return of overseas migrants, students and tourists, which coincides with the incredibly tight rental market conditions across the country, will continue to underpin the multi-units sector. 

“This large volume of work under construction at the end of 2022 will ensure elevated demand for skilled trades across the economy,” Mr Devitt concluded.

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