Australia is building more homes than at any other time previously, new data shows.

Released by the Australian Bureau of Statistics, detailed building activity data for the September quarter shows that the number of dwellings that were under construction across the country edged up by 0.57 percent during that quarter to reach a new record of 244, 479 as at September 30.

Leading the way is the detached house sector, where dwellings under construction increased by 0.58 percent to reach a new high of 104,331.

Meanwhile, the number of multi-units (units, apartments, townhouses etc.) under construction also edged up 0.48 percent to 139,100.

The data also indicates that build times have increased whilst the pace of new building work has slowed.

On the first point, the overall number of dwellings that were completed in the September quarter came in at 44,461 (seasonally adjusted).

This implies a modest rate of completions compared with that which was observed prior to the pandemic (see chart).

In detached housing – where the recent boom in construction has been concentrated –seasonally adjusted completions came in at a respectable but modest 29,153.

Given the pipeline of work, the modest number of completions indicates that average build times have increased – a phenomenon which can be attributed to labour/material shortages.

With completion numbers remaining below commencement numbers (see below), meanwhile, the industry is struggling to make headway in working through the pipeline of projects.

On commencements, the seasonally adjusted number of dwelling starts dropped by a further 5.1 percent in the September quarter to come in at 45,489 – the fourth lowest quarterly total across the past eight years.

Whilst this may partially reflect rising interest rates, it also indicates a continuation of the slowdown in commencements which has taken hold following the peak in activity that was associated with the Commonwealth HomeBuilder program in mid-2021.

Housing Industry Association Economist Tom Devitt said the volume of work would ensure that builders and tradespeople remained busy throughout 2023 despite the slowdown in new projects.

Going forward, Devitt says that commencement numbers for detached housing will continue to decline into 2024.

In the multi-units sector, however, healthy commencement numbers will be supported by return of overseas migrants/students/tourists, tight rental markets and a return to higher density and more affordable living as higher interest rates impact purchaser borrowing capacity.

He added that the modest completion numbers highlight challenges in progressing work through to completion.

“There were only 29,153 detached houses completed in the September Quarter 2022, just 2.5 per cent up on the same time the previous year,” Devitt said.

“The number of homes reaching completion remains no higher than those being commenced with 29,177 new projects (detached houses) started in in the September quarter.

“Supply constraints were holding back completion of these projects. Materials constraints have plagued builders over the last two years, but the shortage of skilled trades is the number one constraint on Australian builders.’’

Master Builders Australia CEO Denita Warn says the industry faces ongoing challenges.

“We are starting to see an easing in demand for new homes as cost of living and interest rates increase. However, the industry is facing immense pressure to deliver projects currently in the pipeline,” Wawn said.

“There is still a record number of homes under construction, but due to supply bottlenecks such as labour and material shortages, the pace at which new homes can be built has slowed down.

“Despite strong intention from governments and industry to reach a target of one million homes under the Housing Accord, the data highlights that more needs to be done to tackle labour shortages and other supply constraints to speed up the delivery of new homes.

“Labour shortages can best be addressed over the short and medium term by making it easier for migrants to work in Australia. The bottlenecks in our migration system need to be addressed as a matter of priority.”



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