HIA recently released its Economic and Industry Outlook report, and it seems that the outlook for the home building and renovation sector is better than it has been for some time. The report includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories.
“It is nine months since the RBA’s last rate rise and market confidence is returning. It is only the heavily taxed markets of NSW and Victoria that are yet to see a trough in detached home building in 2024,” stated HIA Chief Economist, Tim Reardon
“Most housing markets appear to have reached or passed the trough in home building by mid-2024, following the fastest increase in the cash rate in a generation,” added Mr Reardon.
“States with good employment opportunities and relatively more affordable land are leading the charge.
“Western Australia, Queensland and South Australia appear to be past the trough in their cycles. The number of contracts being signed for the construction of new homes has been increasing, at least since the start of the year, seeing a new wave of projects commencing construction.
“This improvement in home building activity is not evident in New South Wales and Victoria where new tax imposts continue to impair home building.
Detached houses: There were 25,890 detached houses that commenced construction across Australia in the first quarter of 2024, up by 5.8 per cent on the previous quarter. This figure is forecast to moderate down by 1.6 per cent in the June Quarter 2024 to 25,470, producing a financial year total of 99,060 commencements in 2023/24, down by 10.1 per cent on the previous year. A modest improvement is forecast thereafter, up by just 0.8 per cent to 99,890 in 2024/25. This would mark the conclusion of the two weakest years for detached commencements since 2012/13, over a decade earlier. Activity is expected to accelerate from here, exceeding 115,000 by 2026/27.
Multi-units: recorded 14,240 commencements in the March Quarter 2024, down by 6.2 per cent from the previous quarter and the second weakest quarter for the sector in over a decade. The June Quarter 2024 is forecast to see a bounce back of 15.4 per cent to 16,440, producing a financial year total of just 60,970. This would be down by 4.0 per cent on the previous year. A modest improvement is expected in 2024/25, up by 13.0 per cent to 68,880, which would conclude the weakest three years for the sector since 2011/12, over a decade earlier. Multi-unit commencements are forecast to accelerate thereafter, reaching a peak of 104,240 in 2027/28.