The detached house segment of Australia’s new home building market is set to hold up relatively well despite a slowdown in multi-unit construction, the latest predictions suggest.

Releasing its latest forecasts, Housing Industry Association (HIA) said it expects the overall number of dwelling commencements throughout Australia to decline from 171,000 in 2019/20 to 148,000 in 2020/21 before bottoming out at 135,200 in 2021/22.

That overall picture, however, obscures diverging trends among housing types.

In multi-units, HIA expects the number of starts to fall from 69,000 in 2019/20  to 43,400 in 2020/21 and 41,000 in 2021/22 – a level of building which is well below the 100,000 plus annual levels of commencements seen in this sector during the recent home building boom.

Within this sector, most of the slowdown will be concentrated in high-rise apartments.

Nevertheless, the market for detached homes will hold up relatively well.

Indeed, HIA expects commencements in this segment to rise from 102,000 in 2019/20 to 104,700 in 2020/21 before dropping back to 94,200 in 2021/22.

Speaking about detached homes, HIA Chief Economist Tim Reardon said the market is being supported by several trends.

First, there has been a surge in detached-home sales following the Commonwealth HomeBuilder program.

The HomeBuilder program was particularly favourable to detached homes as a requirement to have construction contracts signed by December 31 to be eligible made this program more difficult to access for larger and more complex multi-storey projects.

This, Reardon says, will lead to an acceleration of work into 2021.

Next, a combination of subdued prices, government support programs, record low interest rates and an easing of finance restrictions has encouraged first-home buyers back into the market.

In 2020, first home buyers have thus far accounted for around 40 percent of the market – their highest market share in a decade.

Beyond that, Reardon says consumer preferences have shifted toward lower density housing amid concern about COVID safety in multi-storey buildings.

As well, the trend of rural and regional populations moving to metropolitan areas ceased this year as students and young job seekers were not attracted to the cities for education or employment.

This will help to spur demand in regional markets, which are mostly concentrated around detached homes.

Finally, the nature of COVID will drive a preference for detached homes amongst those returning to Australia from overseas.

Reardon says many of these factors are specific to COVID and says housing trends will revert to pre-COVID tendencies once trade and travel return to normal.

Beyond new home construction, Reardon says there will be a strong market for home renovations.

The combination of these to factors, he says, will see employment in home building grow into 2021 notwithstanding the slowdown in multi-unit construction.