A gradual slowdown in housing construction is expected over the next three years due to rising interest rates, as well as land and labor shortages.
However, the yet-to-be-completed pipeline of works should allow housing construction activity to continue comfortably through mid-2023.
“The fastest rise in the cash rate in nearly 30 years will put an end to the Australian housing boom, but there is still a significant amount of construction work to complete,” said Tim Reardon, chief economist at the Housing Industry Association. .
Work on some 132,000 homes is expected to begin in 2021/22, according to the industry body’s outlook report, down about 6.7% from last year’s record figures.
The HIA predicts that the slowdown in single-family home construction will continue into the next year, with 121,320 new beginnings expected in 2022/23 and 99,330 in 2024/25.
Work on new apartments and other multi-unit homes was 35.1% lower than the 2015/16 peak in 2021/22, but HIA expects it to increase over a three-year period.
The startup of more housing units is expected to increase by 4.4% to 80,270 in 2022/23, with a further increase of 2.5% in 2023/24.
Mr. Reardon said that despite exchange rate uncertainty, housing demand in particular would remain strong due to low unemployment, booming export markets, severe rent shortages and the return of foreign migrants and students. .
There are also signs that building materials prices are starting to decline, according to Reardon, with the high cost of lumber and other materials largely responsible for the spike in construction costs in recent years.
ANZ economists Felicity Emmett and Adelaide Timbrell also expected the backlog would support construction throughout the year.
“But we expect a cumulative decline of around 16% through 2023 and 2024, as higher mortgage rates and lower home prices translate into a drop in approvals and, as a result, a drop. construction work, “say economists.
They noted that housing was a major driver of GDP in Australia, so a decline in activity would act as a drag on the economy.