Australia’s detached home building sector is set to experience its strongest year on record amid a flurry of activity to take advantage of the Commonwealth HomeBuilder program, the latest forecast suggests.

And continued strong conditions are anticipated in home renovations activity.

Releasing its latest Outlook Report, the Housing Industry Association says it expects ground to break on almost 130,000 detached homes throughout calendar 2021.

At this level, the number of detached home commencements will eclipse the previous high of 120,000 starts in calendar 2018.

Meanwhile, the dollar value of investment in home renovations is expected to rise by 3.0 percent to hit $38.642 billion in 2020/21 – the highest level on record in more than two decades.

The strong activity in these sectors stands in contrast to the multi-residential sector, in which softer conditions are anticipated and the number of starts is expected to continue to decline amid the loss of migration (see chart).

HIA chief economist Tim Reardon said the detached-home boom was being driven by HomeBuilder along with a shift in consumer preference toward detached home building.

He said regional locations are showing the strongest increase as the population moves away from capital city living.

“HomeBuilder has delivered,” Reardon said.

“All leading indicators show a record volume of detached homes about to commence construction and this is occurring in almost every location across Australia.

“This has not only secured the employment of the 500,000 people employed in detached home construction, it will also absorb tens of thousands of workers from across the rest of the economy.”

According to Reardon, the most significant constraint on detached home building in 2021 will be the availability of residential land.\

Land development activity slowed last year during restrictions – a phenomenon which will restrict the number of homes which can begin construction.

Whilst skilled trades will be in high demand and the supply chain of building products will be stretched, Reardon said detached home construction will pick up some surplus trades from the slower apartment construction sector whilst many building components such as cement, bricks, plasterboard and timber are manufactured locally.

On home renovations, Reardon said HIA had upgraded its forecasts in light of the extension of HomeBuilder until March along with a significant increase in expenditure on items such as hardware, building and garden supplies.

He says many Australians have opted to upgrade their homes instead of travelling during the pandemic.

As well, further renovations activity as transaction volumes in established home sales rise from a low base as a ‘sellers market’ which has arisen with demand outstripping supply tempts a greater number of owners to list their properties.

This bodes well for renovations activity as homeowners undertake renovations either before they sell to increase the property’s value or after they buy to make the property feel more like a home.