Australian home crisis: Nation’s biggest builder says housing affordability fight is ‘going backwards’
Australia’s biggest home builder has warned the nation’s fight to fix housing affordability is “going backwards” as the “pessimistic” Reserve Bank smashes homebuyer confidence.
Australia’s biggest home builder has warned the nation’s fight to fix housing affordability is “going backwards” as the “pessimistic” Reserve Bank smashes homebuyer confidence.
The Housing Industry Association have named the nation’s biggest builders in their annual Housing 100 Report, with Metricon at the top for the ninth year in a row.
But the number of homes being started by the nation’s largest builders are effectively flat year on year, increasing from 57,716 in the 2022-2023 financial year to 59,981 in the past 12 months, despite state and federal governments announcing plans to bolster construction.
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Metricon boss Brad Duggan said while he was proud of the business and its achievements, to be at the top of the list with just 3894 new builds started in the past year, far below their peak of more than 6000, was a sign Australia was “going backwards”.
“To be sub-4000 and still the largest in Australia, that doesn’t paint a picture of a country that’s making inroads on these housing targets,” Mr Duggan said.
The federal government has set a 1.2 million new homes target for the nation across the coming five years, but the Top 100 report from HIA is the latest indication it is not on track to reach the goal.
Mr Duggan said more land supply, more trades and getting cost of living pressures under control were key to increasing housing construction, but while state and federal governments had made announcements in these spaces so far it had been “a lot of talk … but no significant activity on the ground”.
But the big issue right now was homebuyer confidence, which while good in Queensland and South Australia was struggling in Victoria and NSW.
The Victoria-based builder said the Reserve Bank was not helping to build confidence.
“The RBA has not provided a lot of clear guidance,” Mr Duggan said.
“In fact, I feel they are going out of their way to be quite pessimistic.
“Last weekend we had 3000 people through our display homes, but they don’t have the confidence to move forward.”
When the RBA announced that they had held the nation’s cash rate on Tuesday — which underpins interest rates for mortgages — they issued a statement noting they would “remain vigilant to upside risks to inflation and the Board is not ruling anything in or out”.
Many of the nation’s homeowners and would-be buyers had been hoping for a rate cut, with interest rates currently at their highest level since 2011.
In August, Reserve Bank governor Michelle Stevens said she did not believe they would lower the cash rate in 2024.
Mr Duggan added that the cost of borrowing was putting downward pressure on home sizes, with single-storey builds dominating the landscape over the past year.
HIA chief economist Tim Reardon said there had been just 13 homes separating Metricon and the nation’s next biggest builder, the ABN Group.
NSW-based Meriton were the nation’s biggest apartment builder, and ranked third overall with 3277 unit sales.
But while Western Australia’s number of new housing starts were 50 per cent up on pre-pandemic levels, and South Australia and Queensland were at parity, Mr Reardon noted that NSW commencements were down by 40 per cent compared to 2019 and Victoria’s numbers were down by about 30 per cent.
“At the moment it’s around market confidence,” Mr Reardon said.
“But if there is a cut to the cash rate next year, that will accelerate the rate of new home building.”
The HIA report found Australia’s top 100 builders accounted for 38 per cent of the total number of home construction starts around the country in 2023-2024 financial year, up from a third the year prior.
Also hitting buyer confidence, the report noted that the introduction of higher energy efficiency requirements for new homes in most parts of the country had added $25,000 to the cost of a typical house.
The report has forecast housing construction to lift in Western Australia, Queensland and South Australia in the coming year — though continue to track more slowly in NSW and Victoria.
Unit construction, including townhouses and apartments, is expected to continue to decline well into next year.
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Originally published as Australian home crisis: Nation’s biggest builder says housing affordability fight is ‘going backwards’
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