Victorians are building new homes at unprecedented levels, with more houses being constructed in 2021 than ever before. Forecasts from the Housing Industry Association reveal the boost in home construction, with the activity worth around $40 billion to the nation’s economy. However, this boom in home building could be affected by a lack of building materials, labour and available land.
Home Building Numbers Grow Through 2021
The HIA’s economic and industry Outlook Report has forecast growth in the number of detached houses being built, with the high numbers seen in the first months of the year expected to increase.
‘A record number of detached housing starts will occur in Victoria in the 12 months to September 2021 [with] over 45,000 starts. This is almost 17 per cent higher than the peak of the previous boom in 2018,’ stated HIA Executive Director, Fiona Nield.
This large number of new projects is expected to keep the industry active for the next eighteen months, will Ms Nield predicting that the volume of work will continue ‘until at least the second half of 2022.’
Renovation Activity Set To Increase
Renovations are also becoming an increasingly popular option for homeowners wanting to increase the size and value of their house. This has been amplified by the grants afforded by the Federal Government on substantial home renovations, and the lockdowns of 2020 forcing people to spend increased amounts of time in their homes.
‘Renovation activity is also at an all time high and likely to remain elevated for a number of years due to the nature of the COVID recession and house price growth,’ Ms Nield said.
Potential Problems In Supply Chain
Despite the large numbers of home builders wanting to begin their new homes, and the willingness of industry to work on these projects, issues may arise in the ability to source building materials.
COVID-19 has disrupted international supply chains, causing significant delays in the manufacturing and distribution of certain materials. Additionally, some experts suspect that there will not be enough land or labour to meet the growing demand.
‘The key challenge for the industry has shifted from a slump in demand this time last year, to having sufficient supply of materials, labour and land to satisfy this demand. The extension of HomeBuilder’s commencement deadline will help limit the impact of constraints… and ensure the elevated volume of detached homes will be sustained for longer,’ Ms Neild said.
Industry Supported By Apprentice Wage Subsidy
The building and construction industry will be supported in the long term through the
Boosting Apprentice Commencement wage subsidy, announced in the recent Federal Budget. This scheme is designed to support businesses to take on new apprentices and is predicted to assist in preventing a skills shortage.
‘Investing in skills and training today will support Australia’s productivity tomorrow and into the future,’ HIA Managing Director Graham Wolfe said.
Through the subsidy, any business or Group Training Organisation that engages an Australian Apprentice before 31 March 2022 may be eligible for a subsidy of 50 per cent of wages paid to a new or recommencing apprentice or trainee for a 12-month period.