The fallout from the expected downturn in new home construction will be felt far and wide, a new report has warned.
Released by PowerHousing Australia in conjunction with CoreLogic, the Standard House Environmental Scan warns that the impending slowdown in new home construction could reduce the number of engagements for tradespeople and have devastating impacts for areas such as manufacturing and retail.
In its report, PowerHousing draws upon forecasts from the Housing Industry Association, Master Builders Australia and UBS, which expect the number of new home starts (without the effect of the HomeBuilder program) to fall from 230,480 in 2016/17 to between 100,0000 and 120,000 in 202/21.
This, the report said, would have a devastating impact on the volume of work being done.
In 2020/21, HDD Consulting has likely new home completions under its medium scenario falling from 215,200 in 2018/19 to 96,345 in 2020/21.
Whilst the Federal Government’s HomeBuilder Package could add around 15,000 to 25,000 new starts, the grant will nowhere near offset the anticipated decline in activity.
This, the report says, will have a wide-ranging impacts.
It cites the example of two commonly built homes offered by volume builders in greenfield areas: the three bedroom Byfield design built by Simonds Homes and the three or four bedroom Barton design ‘standard house’ by Metricon.
Before a shovel has even gone into the ground, the homes have already created work for town planners, urban designers, surveyors, civil engineers, engineers, energy consultants, architects, interior designers and landscape architects, estimators, building surveyors and kitchen and bathroom designers.
Once construction commences, there is work for carpenters, concreters, bricklayers, joiners, electricians, plumbers, gasfitters, cablers, labourers, glaziers, landscapers, roofers, plasterers, renderers, painters, tilers, carpet layers, fencers, earth moving contractors, waste removal contractors, roof plumbers, air-conditioning installers and more.
Indeed, the report says, the ‘standard house’ design referred to above involves up to 43 occupations.
This includes 31 trades, subtrades and para-professionals who work anything from one day to 90 days on any given job.
All up, it said the fall in activity referred to above could see the number of trade engagements fall by 4.75 million nationwide.
Beyond that, the decline will also hit manufacturing and industrial sectors through lower demand for bricks, paint, truss and framing systems, fibre cement, solar systems, guttering and other products.
Construction of a home the size of Baron or Byfield requires around 5,000 bricks; every 10,000 units of housing stock equates to demand for around 2 million litres of decorative paint.
Also impacted will be areas of retail such as hardware, nursery and flooring.
In hardware retail, for example, housing activity supports employment from sales staff within stores through to account managers, sales reps on the road, manufacturers, warehouse teams to fulfil orders and manage stock, freight/transport providers, receiving teams and stock pickers and packers (for site delivery).
That’s not to consider the thousands more who work in areas which are required to keep this going: transport mechanics, mobile plant sales and maintenance, cleaners, racking and store fixture manufacturers, facilities maintenance businesses, shopfitters, signage printers, IT companies, commercial builders, landscapers, line marking contractors and others.
Finally, workers and small businesses owners in bakeries and cafes may see fewer tradies coming in for their morning coffee or lunchtime pie.
To be sure, the above numbers may overstate the impact.
For starters, the peak to trough comparison above starts from a base of the highest peak in Australia’s largest home building boom on record.
A more realistic starting point for comparison would be the 160,000 to 180,000 homes typically built nationwide in a reasonable year.
Moreover, the above analysis relates to detached homes.
In fact, much of the housing slowdown will be multi-residential building – a sector which is less intensive on a per unit basis in terms of labour and material requirements compared with its stand-alone counterpart.
Nevertheless, Nicholas Proud, CEO of PowerHousing Australia, said the impact should not be underestimated.
He called for more investment in social and affordable housing.
“As the economy heads towards this economic trough, with housing the most visible indicator, there will be state and federal measures to reduce the severity of the downturn and community housing is ready to play a dual role to support additional demand for up to 30,000 dwellings that could be built to support 1.29 million trade engagements,” Proud said.
“The October Federal Budget will be a focus for hundreds of thousands of Australians that derive employment and income from the housing market. Further investment in social and affordable housing will guarantee jobs and the provision of redeveloped and new social housing will help the many that COVID-19 will impact in its next unpredictable stage.”