Homebuilding activity is at a record high, but this trend has definitely reversed.
A record 143,037 new house builds were started in the year to March, according to the most recent data from the Australian Bureau of Statistics. However, when observing the trnd of completed houses vs commenced houses, we can see that they are heading in opposite directions. This suggests that while existing builds are being finished, new builds are slowing down at a rapid pace.
Housing Industry Association economist Tom Devitt said the volume of homebuilding activity for detached houses is almost 80% above pre-pandemic levels.
“This was driven by the combination of the HomeBuilder grant [which ran from June 2020 to April 2021] and record low interest rates,” he said.
Mr Devitt said that with demand high, and supply constraints slowing down the pace of work, Australian homebuilders will be busy for the rest of this year and into 2023. Further information on the outlook for housing can be found on the HIA website.
Whilst the HIA economist’s comments are right, the trend that Australian Loans Group sees unfolding now with interest rates on the rise, construction being very challenging and cost of living pressures, is that new building commencements will be low for some time.
If you are thinking about building, doing a development, purchasing a property off the plan or renovating, please contact us to discuss things before acting.