Australia's housing market is set to break its previous record for construction starts in the next few months, according to the latest projections from the Housing Industry Association (HIA).
Based on the HIA's outlook, detached housing starts will reach a new record in the 12 months to September 2021, with more than 146,000 detached homes commencing construction. This is 20% higher than the previous peak in 2018. Renovation activity is also poised to reach an all-time high and will likely remain elevated.
"This large volume of work will ensure that the industry remains very active through until at least the second half of 2022," said Angela Lillicrap, economist at HIA.
Lillicrap said the HomeBuilder scheme and the low interest-rate environment are major drivers of this potential surge in construction starts.
"This level of activity is not likely to be seen again for many years, if not decades. The key challenge for the industry has shifted from a slump in demand this time last year, to having sufficient supply of materials, labour and land to satisfy this demand," she said.
Lillicrap said the timing and speed of the recovery in overseas migration will have a significant impact on these forecasts. She said the return to stable and certain population growth is a crucial consideration for a stable economic growth, which will ultimately impact the housing market.
"If overseas migration returns sooner, or faster, than anticipated, then the trough of 93,500 new housing starts in 2023 will not be as deep as currently forecast. Equally, if the restrictions on skilled migration continue into 2022 the depth of the emerging slowdown in new detached starts will be exacerbated," she said.
