Home building to surge in surprise COVID-19 turnaround

Residential construction will surge above 194,000 new homes this year and continue at a rapid pace into 2022, Master Builders Australia says.

Residential construction across Australia will surge above 194,000 new homes this year and continue at a rapid pace into the middle of 2022, countering a 10.6 per cent fall in commercial activity driven by a slowdown in hotel and aged-care construction.

Forecasts released by Master Builders Australia on Monday reveal residential construction will soar to 194,257 homes by July 1, reflecting the success of the Morrison government’s HomeBuilder scheme that also drove a 12.4 per cent increase in major home renovations.

The MBA, which has updated its forecasts four times through the pandemic, predicts strong residential construction activity across 2021-22 with 151,754 new builds.

The lobby group, representing the $200bn building and construction sector, had painted a gloomy picture for the sector at the height of the pandemic last year, suggesting only 115,822 builds. The MBA’s final prediction is now expected to exceed pre-COVID residential construction levels in 2019-20 by 13.4 per cent.

 

It expects the number of HomeBuilder applications will come in at 130,000 when the final numbers are released. If it reaches that level, the value of residential construction work directly supported by HomeBuilder is expected to peak at $39.36bn and 355,145 full-time jobs. HomeBuilder will have pumped $114.4bn into the economy, boosting GDP 5.8 per cent.

Commercial construction is expected to be down 10.6 per cent, linked with a sharp drop in hotel and aged-care construction, as well as falling demand for office blocks and shopping centres.

MBA chief executive Denita Wawn said federal and state governments must now move to managing the economic transition “from being on life support to one that is growing strongly to support business success, jobs and people’s aspirations”.

“Governments threw everything they had at the economy to protect it from COVID but ­despite it amounting to the largest government stimulus in our history it still only equalled one in every $5 spent in the economy,” Ms Wawn told The Australian.

“We need policies to generate a surge in economic activity to provide the confidence that will unleash household and business spending. Every dollar spent on building gives back $3 in benefits to the wider economy, which means the government must continue to put our industry at the vanguard of economic recovery.”

Josh Frydenberg will use Tuesday’s budget to maintain the government’s focus on the housing and property sectors, announcing a new Family Home guarantee for single parents and the expansion and extension of the First Home Super Saver and First Home Loans Deposit schemes.

Treasurer Josh Frydenberg will use Tuesday’s budget to maintain the government’s focus on the housing and property sectors

Ms Wawn, who described HomeBuilder as one of the “most effective government interventions in history”, said restoring confidence across the private sector was key to helping the commercial construction sector “bounce back”.

“The success of HomeBuilder should be a light-bulb moment for housing policy; it shows that providing mechanisms to support people to move from affordable renting to affordable home ownership should be the next phase,” she said.

Ms Wawn said sceptics who had questioned HomeBuilder had underestimated the enthusiasm of Australians for “building new homes, given the chance to overcome the deposit gap”.

“We now need to manage the demand that the scheme has generated and support from the government to bring in skilled trades people from overseas in a COVID safe way.”

Kate Colvin, national spokeswoman for the Everybody’s Home campaign to end homelessness, said the government’s plan to encourage home ownership for single parents was “entirely legitimate” but suggested it would support those earning­ ­between $80,000 to $125,000.

“Housing need is greatest among people on lower incomes, especially older women and those escaping family violence,” Ms Colvin said.