House construction numbers soar even as builders chafe under supply chain issues and labour shortages
Australia continues to see record home-building activity even as construction companies chafe under supply chain issues and labour shortages.
More than 100,000 houses were under construction in the September quarter, nearly double the rate recorded prior to the COVID-19 pandemic, according to a report by The Australian.
Total dwellings under construction during the quarter rose by 1% from the prior quarter to 245,000, blowing past the pre-pandemic high of 231,000, according to the Australian Bureau of Statistics.
The total number of dwellings under construction hit a record high in December 2021 following a boom in approvals, according to The Australian. This boom was driven by government incentives such as HomeBuilder and record-low interest rates, which spurred demand and sent property prices soaring.
Record numbers
The number of new stand-alone houses hit record levels in early 2021 and rose again in the September quarter to 103,000, compared to about 60,000 before the pandemic.
New home commencements peaked in mid-2021, but there were still 45,500 commencements in the September quarter, according to seasonally adjusted ABS figures.
“The volume of houses under construction is expected to keep Australia’s home builders busy this year, despite the slowdown in the number of homes expected to commence construction,” Housing Industry Association senior economist Tom Devitt told The Australian.
Devitt said that supply and labour issues have left many builders struggling to keep up with demand.
“For over two years, Australia’s home builders had been commencing more new projects than they had been completing,” he said. “Supply constraints were holding back completion of these projects. Material constraints have plagued builders over the last two years, but the shortage of skilled trades is the number-one constraint on Australian builders.”
More apartments
Builders may see more activity in multi-unit construction. With the Reserve Bank expected to hike rates by 0.25 percentage points to 3.35% next month, Devitt said affordability issues could push would-be buyers toward apartments.
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“In addition to this, the volume of multi-unit dwellings under construction continues to grow as commencements exceeded completions over the 18 months to September 2022,” he said. “The multi-units [apartment] sector should continue to be supported by the return of overseas migrants, students and tourists and the incredibly tight rental market across the country.”
The high demand, coupled with increasing building costs, has put many home builders in a bind. Many companies that contracted to build homes for a fixed price have found their own profit margins squeezed as material and labour costs skyrocketed. In the last 18 months, nearly 30 Australian construction companies have collapsed.
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