The Housing Industry Association (HIA) recently released its quarterly economic and industry outlook report. An important barometer of industry activity, the HIA State and National Outlook Reports forecast new home building and renovation activity throughout Australia.
Overall, the Reports indicated that reduced population growth, combined with restrictions on lending requirements, will result in falling building activity over the coming years. However, this could be a good thing for potential home builders.
According to reports, new home starts are expected to be around 172,000 per annum by 2030. This is compared to previous long-term forecasts by HIA which predicted starts to be at 190,000. Moreover, this represents a significant drop from the peak of new home starts in 2016, which were at 234,000.
This decrease is, in part, due to population growth stagnating. Figures show that population growth in Australia was decreasing, even prior to COVID-19, due to declining overseas migration as well as a drop in the natural rate of population growth. The COVID-19 pandemic will also, undoubtedly, restrict population growth due to uncertainty regarding future migration activity.
Additionally, the post-GFC economy has meant that banking regulators have been stricter when it comes to lending requirements. This has resulted in fewer people have access to the finances required to build a new home or undertake substantial renovations.
HIA projects that the multi-unit market will be most affected by the economic shock of COVID-19, particularly due to the decrease in overseas migration.
According to HIA’s Chief Economist, Tim Reardon, by returning to previous standards of lending practices, Australia would be better equipped to recover from the financial impact of the COVID-19 pandemic.
In the short-term, however, the HomeBuilder scheme will be effective in providing employment across the construction industry and, as a result, help to recover the wider economy. In fact, it has already proven to provide the industry with a much-needed boost, with new home sales being boosted by 77% in June.
While these reports don’t bode well for the construction and building industry as a whole, for those looking to build it can actually represent the perfect opportunity to start construction of a new home.
This is because, more than ever, builders will be on the lookout for new work. Not only does this mean that home builders will be able to take their pick from highly sought-after builders, it also means that many builders will be offering specials and discounts, making it more affordable to construct a new home.
Plus, eligible owner-occupiers are able to access the HomeBuilder scheme until the end of 2020, meaning now is the perfect time to get started on that new build.