Record year for new homes starts

More detached homes commenced construction in the 12 months to September 2021 than in any previous period, according to HIA Economist, Tom Devitt.

The ABS released its building activity data for the September 2021 quarter. This data provides estimates of the value of building work and number of dwellings commenced, completed, under construction and in the pipeline, across Australia and its states and territories.

“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,” added Mr Devitt.

“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.

“This puts detached house commencements over the last 12 months at 149,345, a new record high and 12.8 per cent above the pre-HomeBuilder record of 132,377 in 1988/89.

“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 current boom is expected to continue supporting strong levels of employment into 2023, aided further by record low interest rates and the pandemic pushing households towards lower density living.

“Strong employment conditions, rising house prices and consumer confidence are also continuing to support housing demand.

“The constraint on home building is not demand but the availability of land, labour and materials. 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. 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,” concluded Mr Devitt.

All states and territories saw declines in the September 2021 quarter in new house commencements, led by the Northern Territory (-65.5 per cent), Western Australia (-28.0 per cent), Queensland (-24.6 per cent), Tasmania (-24.2 per cent), the Australian Capital Territory (-11.9 per cent), and New South Wales (-11.3 per cent), Victoria (-11.0 per cent) and South Australia (-8.6 per cent).

A few states saw increases in multi-unit commencements in the quarter, led by Tasmania (+240.4 per cent), Western Australia (+37.2 per cent) and Victoria (+17.0 per cent). The other jurisdictions saw declines, led by the Northern Territory (-46.7 per cent), the Australian Capital Territory (-42.4 per cent), Queensland (-35.2 per cent), South Australia (-33.4 per cent) and New South Wales (-32.6 per cent).

Source: HIA