Aussie new home building boom to continue through 2022, but ‘Covid shock’ looms

The pandemic residential building boom will continue into 2022, but a ‘Covid shock’ is looming for two cities. Here’s what’s forecast for each capital as more Aussies get into new homes.

It’ll be a slower year on the tools in 2022, but the boom continues.

Australia’s new home building boom will continue into 2022, with about 191,000 homes — including 121,196 houses — tipped to be built in the new year.

The buoyant figures will keep tradies and builders at capacity around the nation, according to a new Housing Industry Association report released today.

But there’s a bitter end to the boom looming for Melbourne and Sydney, with the HIA revising its predictions for housing construction over the decade to be lower than before the pandemic with “Covid shock” tipped to hit the two capitals in mid 2023.

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HIA senior economist Tim Reardon said higher than expected sales for new houses had led the association to upgrade its forecasts to very healthy levels in all jurisdictions for the short term.

“The most homes we had built prior to HomeBuilder was 130,000 detached homes in a year,” Mr Reardon said.

“We will be doing 120,000 next year, so it’s still one of the better years on record.”

However, the numbers will be below those seen this year as HomeBuilder led to 150,000 starts in a booming year of construction unlikely to be repeated anytime soon.

Housing construction is expected to drive state economies throughout the year ahead.

NEW HOUSE BUILDS FORECAST FOR 2022

NSW – 25,052

Victoria – 37,879

Queensland – 24,660

South Australia – 9027

Western Australia – 20,223

Tasmania – 2461

Northern Territory – 610

ACT – 1283

Total – 121,196

Source: HIA

The HomeBuilder scheme run by the federal government handed out grants of between $15,000 and $25,000 to those building a new home, subject to certain criteria being met. It ended in March this year.

Mr Reardon added that in addition to the end of federal stimulus, part of the reason for a reduction in builds in 2022 was that the industry was running into shortages after working at capacity for more than a year.

The costs of trades and building materials has soared in the past year due to high demand.

ABS figures show the cost of homebuilding materials around Australia rose 8 per cent in the year ending September 30, while the price of trades rose 5.2 per cent.

But the Covid-19 pandemic will ultimately cost Melbourne and Sydney, with the two capitals the biggest losers from the pandemic’s lengthy interruption to international migration.

“We have revised our medium term forecasts for the decade due to Covid shock,” Mr Reardon said.

High levels of internal migration away from the two big capitals will result in fewer apartments being built in Sydney and Melbourne, leaving the nation’s two biggest building economies worse off from the pandemic.

Migrating families are building new homes as they move interstate.

For NSW, it equates to building almost 12,500 fewer homes — mostly units.

In Victoria, there will be 16,135 fewer homes built despite more than 10,000 extra houses being built than predicted last year.

But this is good news for the other states and capitals, which are now expected to achieve construction numbers better than those forecast before the pandemic — particularly Western Australia, which will end the decade about 15,000 homes better off.

Nationally, we are expected to build a whopping 1,889,008 homes over the decade.

NEW UNIT BUILDS FORECAST FOR 2022

NSW – 25,895

Victoria – 18,337

Queensland – 14,701

South Australia – 2579

Western Australia – 4736

Tasmania – 332

Northern Territory – 156

ACT – 3394

Source: HIA

Mr Reardon added while NSW’s multi-unit construction sector was picking up, it was still lagging in Melbourne.

The HIA is expecting multi-unit construction to pick up over the next year in Melbourne, and continue to rise in Sydney.

He still expected these numbers to rise in the Victorian capital as a result of a pandemic-led push to lower-density living that meant even where people did choose to live in an apartment, they were less likely to rent out a spare bedroom.

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