Residential building volumes up 8.5 per cent in FY24 as Metricon tops list for ninth consecutive time

Australia’s largest residential builder, Metricon Homes, has been named Australia busiest builder for the ninth consecutive time as the sector shows signs of recovery.

Metricon chief executive Brad Duggan at a construction site in Brisbane

Metricon Homes is approaching a decade of dominance after being named Australia’s largest residential builder for the ninth consecutive time, but chief executive Brad Duggan warns that the country is falling behind on delivering new homes.

The Victorian-based builder reported a total of 3894 new home starts across four states in the 2024 financial year, down 17 per cent from 4693 a year earlier.

“We note that to be the largest builder in Australia with under 4000 site starts, it’s clear that the country is falling behind on delivering the homes that have been identified as essential,” Mr Duggan said.

“We need to accelerate momentum in the industry. It’s time to move beyond the sole focus on social housing and tackle the bigger picture: cutting planning red tape, increasing access to land, growing the country’s trade base, scrapping discussions on tax changes impacting investors and superannuation funds, and crucially, addressing the cost-of-living crisis.

“These are the real levers to restore customer confidence and get people building again.”

The HIA-Colorbond Steel Housing 100 Report shows there were 59,981 residential starts in 2023/24, up 4682 on the previous 12 months, an 8.5 per cent increase.

It has been a tough time for the sector, in which there has been more work, but no profit, said Hutchinson Builders chairman Scott Hutchinson.

Mr Hutchinson said the sector was still struggling to absorb the “insane” 30 per cent-plus increase in building costs over the past two to three years.

The Brisbane-based national construction company was ranked at number 11 in the HIA list, with 1745 starts for the 2024 financial year, up 31 per cent.

“Building costs are still too expensive to make all but the top end of the unit market work,” Mr Hutchinson said.

“The only residential stuff that’s going ahead is the government-sponsored build-to-rent and the very top level of the riverside blocks with really good apartments because they can afford to pay the extra money from the building costs.”

Mr Hutchinson said it would be some time before the sector returned to normal.

“Costs are probably flattening out, but now we have the Olympics so it could jump again,” he said. “It’s still miserable out there but we should be out of it this financial year and then it should flatten out.”

But HIA chief economist Tim Reardon said overall market confidence was returning after the Reserve Bank kept interest rates on hold for the 10th consecutive month and indicators pointed to an increase in volumes in the December half and into 2025.

“Low levels of unemployment and strong population growth have driven ongoing demand for new homes, despite the increase in the cost of borrowing and a decline in household consumption,’” Mr Reardon said.

“The recovery in market confidence isn’t evenly distributed across each jurisdiction, and this has had an impact on the results of this year’s Housing 100.

“Increasingly the outlook for home building is dominated by local factors, such as the price of land and state government taxes. For this reason, a recovery in building activity in NSW appears set to lag all other jurisdictions.

“At the other end of the spectrum, Queensland, Western Australia and South Australia appear set to see an increase in building activity.

“Population growth through the pandemic and then a return of overseas migration have seen a stabilisation of building levels in 2023/24, similar to that seen immediately prior to the pandemic. This bodes well for a more stable return to building activity in future years.”

HIA chief economist Tim Reardon.

In second place at 3881 construction starts was the Andrew Roberts-led ABN Group which increased its workload by 375 homes, boosted by stronger market conditions in Western Australia and growth in Victoria.

Meriton Apartments was third with 3291 starts – up 45 per cent from 1024 homes last year, while Perth-based Home Group and Blueprint Homes rose form 12th to fourth place with 1166 home starts – a 78 per cent rise.

Apartment builder Multiplex made a return to the top 20 in seventh place with 2244 starts, up from being ranked 62 with just 219 the previous year – a 925 per cent increase.

The report states the volume of multi-unit commencements in the 2024 financial year was just 56 per cent of those in 2016/17, before the impact of taxes on investors took effect.

It states that a trough in commencements isn’t likely to emerge until 2025, at the earliest, with sales still adversely impacted by a range of additional costs.

Victoria, with 21,644 starts was the busiest state for home construction by Housing 100 members, followed by Queensland with 13,942, and NSW with 10,254 starts.

The report states new home sales, housing finance and building approvals continue to show decade-low levels of work entering the pipeline.
“But encouragingly, all indicators appear to have reached a trough in 2023. From this low point, the recovery will be slow and inconsistent across the jurisdictions and influenced by policy decisions at a state and local level,” it reads.

“The major markets of NSW and Victoria face additional challenges with the cost of land and changes in migration patterns. With a large volume of detached houses set to be completed in 2024, competition for skilled trades will ease, but the cost of these trades is likely to continue to rise as competition from other construction sectors remains strong.”

Originally published as Residential building volumes up 8.5 per cent in FY24 as Metricon tops list for ninth consecutive time