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New home starts reach record high

By Juliet Helmke
21 January 2022 | 10 minute read
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More new homes broke ground in the 12 months to September 2021 than in any other period on record, even with a decline in construction activity due to lockdowns in major markets.

Looking at the latest figures from the Australian Bureau of Statistics (ABS), HIA economist Tom Devitt confirmed what had been projected through 2021: that records would fall. 

ABS data indicated that 149,345 new homes had commenced construction in the 12-month period. 

“[That’s] a new record high and 12.8 per cent above the pre-HomeBuilder record of 132,377 in 1988/89,” Mr Devitt said.

The September figures showed that the building industry had slowed considerably during the COVID-19 restrictions impacting the country throughout 2021’s third quarter. But it wasn’t enough to put a damper on the year’s strong figures.

“Lockdowns in Sydney and Melbourne resulted in a sharp contraction in new detached home starts in the September quarter, with a 16.5 per cent contraction compared to the record high of the previous quarter.

“The decline in new home commencements in the September quarter was not a reflection of a slowing market, with other indicators, such as building approvals, showing a continued strong pipeline,” Mr Devitt said.

And though numbers dropped, September’s figures were still healthy in the context of larger trends.

“There were almost 36,000 new house commencements in the September quarter. Despite the decline, this is still stronger than any quarter before the mid-2020 introduction of the HomeBuilder grant,” Mr Devitt explained.

“There were also over 20,500 new multi-unit commencements in the September quarter. This was down by 15.8 per cent on the previous quarter.

“Despite this September quarter contraction, multi-unit commencements were also still up by 11.7 per cent for the year.”

The economist projects the current building boom to continue, supporting strong levels of employment into at least 2023. Continued record-low interest rates and the pandemic pushing households towards lower-density living will drive this activity, helped by rising house prices and stabilising consumer confidence.

HIA will be keeping a keen eye on factors such as the availability of land, labour and materials, which have the potential to throw up roadblocks in the face of strong demand.

“The shortage of labour and materials has led to construction timeframes increasing significantly. Under normal circumstances, the surge of HomeBuilder projects would have translated into an increase in completions from the June 2021 quarter,” Mr Devitt said. 

”However, completions have been slower to respond. As a result, the volume of approved-but-not-yet-commenced work is at its highest level in over a decade.”






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