Nathan Mawby
18 Feb 2021
Australian housing construction will reach unprecedented levels in 2021.
Australians are set to build more houses in 2021 than ever before, with regional areas and first-home buyers to be the big winners of a 130,000-home bonanza.
But a “dark shadow” looms for the nation’s builders in 2023, with one of the country’s most influential housing groups warning detached home construction will fall to levels not seen since the global financial crisis.
Forecasts from the Housing Industry Association to be released today have revealed the construction will be worth about $40bn to the nation’s economy.
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The figure trumps the 120,000 house builds recorded in 2018, and secures about 500,000 construction jobs nationwide — as well as tens of thousands in fringe industries.
HIA chief economist Tim Reardon said the federal HomeBuilder grants scheme was the “primary cause of this upgrade in our forecast”, which had sunk as low as 80,000 in worst case scenarios considered last year.
The government program offers those building or substantially renovating a home a $25,000 or $15,000 grant, and as of yesterday had attracted almost 85,118 applications nationwide, despite initially being envisaged to support just 27,000 households.
Builders are believed to be holding off finalising thousands of construction contracts around the nation in order to give them as much time to commence construction as possible.
The HIA is expecting a significant surge in applications as the program ends on March 31, with many builders and homebuyers currently “holding onto contracts” to maximise the time to build within the six-month parameters of the time-limited scheme.
However, Mr Reardon warned the industry faced a “dark shadow” in a few years.
“The contraction in 2023 will be similar in scale and timing to what we saw after the GFC,” he said.
“This year home builders will pull the economy out of recession, but in 2023 we will need the economy to pull home builders forward.”
He advised builders to put money into their savings this year.
Federal Housing Minister Michael Sukkar said the HIA forecasts were a “testament to Australia’s tradies”.
“(But) there is no denying there are still challenges ahead in our recovery,” Mr Sukkar said.
While builders and tradies will have a boom year in 2021, activity will fall by 2023.
A nationwide hunt for tradies is already underway, with the country’s largest volume home builder Metricon noting regional construction workers were in high demand in Victoria, Queensland, NSW and South Australia.
“To meet this surge in activity Metricon are currently running a recruitment drive seeking local site managers, painters, bricklayers, carpenters and tilers, with a number of projects ready for them to work on and a very strong pipeline of future work,” said director Peter Langfelder.
“We have been recruiting a great number of office-based roles in these regions too, not just trades, with sales, drafting and customer service appointments continuing to keep up with the boom in demand.”
Victoria will build the most houses nationwide, with more than 10,000 expected to start construction every three months throughout 2021, breaking records that have stood since 2009. It will be hit hardest by future declines in construction, however.
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“Everywhere other than inner Sydney and inner Melbourne is going to do very well,” Mr Reardon said.
“From Cairns to Canberra, Adelaide and Perth, and every beachside area from Sydney’s outskirts around Hornsby up to Brisbane.
“And in Victoria, all of the growth corridors and then from Bendigo to Ballarat and all the way through to the borders will do well.”
Regional areas are expected to see the primary benefits of the construction surge.
The figures anticipate NSW will have 7000 new houses started a quarter for the rest of the year, more than 6000 in Queensland, about 5000 in WA and around 2500 every three months in South Australia.
Despite starting just over 800 new houses a quarter, Tasmania will have its best year since the 1970s.
Mr Reardon noted more homes might have been built had production of titled land not slowed early in 2020.
Despite the good news for housing construction, apartment building will decline everywhere except WA and Queensland, with just 50,000 new units expected to commence nationwide in 2021.
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