Master Builders SA forecast shows 13,600 new houses built in South Australia last financial year

The last time SA saw a housing market this strong, flares, platform shoes and disco were in style.

South Australia has experienced a housing boom not seen since the 1970s, with hundreds of millions of dollars in government subsidies fuelling a surge in construction to prevent Covid-19 crippling the home-building sector.

The latest building forecast from the Master Builders SA (MBSA) – released exclusively to The Advertiser – reveals builders’ construction of new detached homes hit 11,200 in the 2020/21 financial year, up 46 per cent on the previous period.

It says this level of activity was last experienced in 1975/76, when high population growth driven by overseas immigration fed an appetite for new homes.

There was a total of 13,687 new buildings started last financial year, including units and apartments, up from 10,679.

But the MBSA is predicting that home building will soften over the next two years as the impact of the HomeBuilder stimulus grant, aimed at protecting the sector and economy from Covid, washes through.

It forecasts 4202 fewer properties will be built over the next two financial years before picking up again by 2023/24.

Revenue SA, which administers the grant on behalf of the federal government, has so far paid $208.5m in HomeBuilder grants to 8662 applicants. There were 14,028 applications to the scheme, which closed on April 14 last year.

Yvette Growden is building a new house at West Lakes Shores with Metricon. She is part of a housing boom fuelling the state economy. Picture: Keryn Stevens

The boom, however, continues to place acute pressure on the supply of materials, with new figures from the MBSA also showing increasing prices for items such as timber and steel.

MBSA chief executive Will Frogley said the construction data showed that the “great Australian dream of home ownership has come roaring back”.

“The 1970s housing boom was off the back of strong population growth. This is a Covid boom driven by HomeBuilder, positive net migration for the first time in many years and South Australians wanting a lifestyle change,” he said.

“Not to be overlooked, non-residential building has led the nation, with the government’s massive education capital works program in particular keeping many builders and subcontractors busy.

“The benefits of a strong building industry flow right through the community – tradies, suppliers, apprentices and many more.”

The HomeBuilder scheme gave grants of between $15,000 and $25,000 for new houses or substantial renovations valued between $150,000 and $750,000. Contracts had to be signed between June 4, 2020 and March 31, 2021.

Mr Frogley said SA’s low unemployment rate “vindicated” the federal government’s focus on the building and construction sector to stimulate the economy.

“Sales are hanging in there pretty well,” he said. “There certainly hasn’t been a massive post-HomeBuilder cliff.

“The only downside of the very strong demand is it’s corresponding with shortages of materials and trades, with Covid continuing to disrupt supply chains.”

Metricon SA general manager Richard Bryant says sales have remained strong despite the end of the HomeBuilder stimulus.

The shortage, particularly of structural timber for house frames, has led to significant construction delays.

Latest ABS figures show building material costs in SA for December were 12.9 per cent higher than a year ago.

Structural timber is 39.4 per cent more expensive and the price for reinforced steel has jumped 43.1 per cent.

Metricon South Australia general manager Richard Bryant said house sales continued to be strong “in a boost for the industry and the economy in the midterm”.

“It’s pleasing to see record starts in South Australia flowing through from the HomeBuilder stimulus,” he said.