Record new house commencements
Australia has experienced a record year of new house commencements, despite ongoing labor and material shortages. Image – Canva
  • New house commencements record all-time high despite sharp decline in the September 2021 quarter
  • Demand continues to thrive, though labour and materials shortages constrain industry
  • NT leads nationwide September quarter declines in new house commencements

The Australian residential building industry is thriving, with figures indicating record levels of new homes commenced construction in the year ending September 2021.

The Australian Bureau of Statistics (ABS) estimated the value of building work and the volume of new dwellings in any phase of planning, construction or completion across Australia.

Record starts despite September decline

Economist with the Housing Industry Association (HIA), Thomas Devitt, attributed the September quarter’s sharp decline of 16.5% in new house commencements to ongoing lockdowns in Sydney and Melbourne.

“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.”

Thomas Devitt, HIA economist

Mr Devitt added that while new house commencements fell to 36,000 in Q3 2021, the figure remained significantly above all quarters pre-HomeBuilder grant, which was announced in mid-2020.

“This puts detached house commencements over the last 12 months at 149,345, a new record high and 12.8% 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% on the previous quarter,” he said.

Despite the substantial reduction in new house commencements recorded in the September quarter, multi-unit commencements rose by 11.7% for the year.

These figures show confidence in the sector, with over 20,500 multi-unit developments commenced.

Supplies fall short despite high demand

The soaring number of new home commencements reflects a positive outlook for the near future of Australian residential building, according to Mr Devitt.

“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,” Mr Devitt explained.

Despite the home building business booming, issues exacerbated by the pandemic continues to hold the industry back from reaching its full potential.

“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,” Mr Devitt said.

Consequently, the ongoing labour and materials shortage has resulted in new projects being delayed before construction can even commence.

“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.”

Thomas Devitt, HIA economist

“As a result, the volume of approved-but-not-yet-commenced work is at its highest level in over a decade,” concluded Mr Devitt.

NT leads mammoth falls

As for the states and territories that fell the most in new house commencements during the September quarter, the Northern Territory lead with a steep decline of 65.5%.

Following behind were Western Australia (-28.0%), Queensland (-24.6%), Tasmania (-24.2%), the Australian Capital Territory (-11.9%) while the remaining states of New South Wales (-11.3%), Victoria (-11.0%) and South Australia (-8.6%) fell marginally.

The changes to multi-unit commencements in the September quarter displayed far greater diversity, with Tasmania (+240.4%), Western Australia (+37.2%) and Victoria (+17.0%) on the rise.

The remaining states and territories all recorded declines led by the Northern Territory (-46.7%), the Australian Capital Territory (-42.4%), Queensland (-35.2%), South Australia (-33.4%) and New South Wales (-32.6%).

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