New home building is set to reach record levels during 2015, and stay at a healthy (albeit lower) level in 2016.

It is projected that 213,420 new home commencements will take place in 2015, representing an increase of 7.5 per cent over the previous year, with nearly 190,000 to follow next year. This is good news for the home building materials industry and the positive story is reviewed in a new Building Materials Bulletin released by Australian Construction Insights (ACI).

The Building Materials Bulletin provides industry participants with Australia’s most in-depth review of building materials trends and usage in the new residential construction sector. The value of the bulletin stems from its ability to overlay the economic and housing environment with a unique and extensive analysis of the composition of building materials used in the construction of new housing in Australia.

An invaluable specifications tool, it provides building materials forecasts for the construction of new detached houses out to 2019. These forecasts offer a unique insight for those engaged in the manufacture, distribution, marketing and sale of all building materials in Australia. For example, ACI forecasts that plasterboard usage for detached house construction will reach a high of 71.02 million square metres during 2015. This is equivalent to almost one tenth of the area of Singapore! In the case of concrete used for house slabs, the projection is that usage will reach about 2.73 million cubic metres this year. This would be enough to fill the MCG more than one and a half times over.

In addition, the bulletin provides analysis of price developments for seven categories of building material used in residential construction: timber, board and joinery, ceramic products, concrete, cement and sand, cement products, and steel products. Pricing developments are of course now being considered in the context of the sharp decline in the value of the Australian dollar over the last year.

The recent upturn in new home building activity is being driven by multi-unit activity, and ACI projects that this segment of the market will account for about 47 per cent of new dwelling commencements during the year. This represents the continuation of a longer term trend which has seen the detached house share of the market decline significantly, a point I have canvassed before. For its part, detached house building in Australia actually peaked way back in 1988/89, when over 132,000 starts occurred. That haul has yet to be bettered and in this cycle detached house commencements are forecast to peak at a level of 113,700.

The fall in the detached house share obviously means that building materials demand on a per home basis has declined over time. However, the ACI Building Materials Bulletin demonstrates how the average size of new detached houses has tended to increase over time, and this means that there is a bigger appetite for the materials industry to feed. The report also discusses the interesting point that the size of new detached houses tends to decline during times of economic downturn and increase when things are looking rosier. Combined with the reduced volume of new building that takes place, there tends to be disproportionately large reduction in materials usage during periods of weaker market conditions.

In terms of new home building, demand for related building materials is determined by a range of factors, including the number of new homes started, their size, composition and style. Changes in tastes and building regulations also affect materials usage.

The relationship between building materials usage and house size is not always straightforward. For materials like flooring, usage increases roughly in proportion to floor area. However, in the case of skirting for example, the perimeter of the house, rather than its area, has the most direct effect on the amount of material used. For brickwork, usage is most influenced by the size of the outer wall surface.

With the facts and figures forecast in place, the Building Materials Bulletin should prove to be an invaluable tool.