Apartment construction must be doubled: HIA

The Housing Industry Association’s (HIA) chief economist Tim Reardon has urged that the volume of apartments commencing construction will need to double to achieve the Albanese government’s 1.2 million housing target by 2029.

Reardon said it is anticipated that it will take “at least six years” to reach the 1.2 million homes target at current policy settings.

HIA’s Economic and Industry Outlook report said that multi-unit commencements are forecast to produce a 2023/24 financial year total of 64,350. This figure represents a 2 per cent increase compared to the decade trough last year.

However, the report calculated there to be 95,380 detached homes that will commence construction during this period, revealing a decrease of 13.4 per cent when compared to the previous year, and down by approximately one-third on the 2020/21 peak.

HIA said this is set to mark the trough of the cycle in what is to be the weakest financial year in over a decade.

“The volume of multi-unit commencements has fallen to almost half the volume commenced in 2016, before the impact of taxes on investors took effect,” Reardon said.

“More recently, apartment construction has also been constrained by labour and material shortages and cost. This appears likely to continue for another year.

“In the face of taxes on foreign investors, rising costs and longer build times, a significant volume of high-rise apartment projects will remain on the shelf.”

Reardon said that this low volume of home building will occur amid “pent-up housing demand and low unemployment levels that further drive demand”.

Furthermore, despite the headwinds of higher interest rates, an increase in established home prices will make building a new home more attractive, Reardon said.

Budget boost for tradies

Last week (8 May) the federal government announced the investment of $90.6 million to go towards boosting the number of skilled workers in the construction and housing sector.

The government said the investment was part of a “big focus” on housing in the upcoming 2024–25 budget on 14 May.

HIA’s managing director Jocelyn Martin welcomed the new measures to help increase the pipeline of workers for construction and housing.

“This includes measures to help attract more apprentices into the industry, fee-free training, streamlining the visa program for in-demand trades and an education and awareness program to assist participants [to] navigate the complex process to be able to work on Australian building sites,” Martin said.

“One of the key issues in building these much-needed homes [is] having an adequate workforce and without this the Government will fall well short of its housing target.

“It is therefore pleasing to see the Budget commitment to start to address these skills shortages in our sector as well as the recognition of this as a key area of government[’s] focus going forward.”

[RELATED: HIA welcomes budget boost for skilled workers]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

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