THE BUILDING INDUSTRY: Insights Forecasts AND
PREDICTIONS FOR THE BUILDING INDUSTRY IN AUSTRALIA
The 2022/23 year was challenging for the building industry. The rise in borrowing costs, coupled with the elevated construction costs pushed the price of new homes out of reach of many potential buyers. As a result, housing approvals in 2023/23 declined by 13.8 percent. (HIA) Building approvals, lending, and consumer confidence all point to a slowdown in economic growth in 2024. Indicators such as these are at their lowest level in decades, or close to it. Cash rates have increased at their fastest rate in a generation, which is why future growth indicators are looking very soft. Throughout the first half of 2024, residential builds will be completed rapidly by the industry. This is a result of a bottle neck of builds that need to be completed off the back of the pandemic. ASSA ABLOY anticipates that New South Wales and Victoria will see the most significant slowdown in detached starts, and modest growth in multi residential developments. The rise in the cash rate has a softer impact on buyers that already own a home,
however a more significant impact on first home buyers. The market will shift to higher value builds, knock down rebuilds, spec-homes and higher value renovation activities. Over the medium term, the outlook for home building is set to improve. Indications of ongoing economic growth and a return to stable and reliable population growth should see the volume of medium density starts exceeding 25,000 per quarter. A sustained increase in medium density starts is necessary if the goal of building 1.2 million homes over the next five years is to be achieved.(HIA) Detached house commencements declined by 11.7 per cent in the June Quarter 2023, to just 24,740, the weakest quarter in a decade. This brought the 2022/23 financial year to 109,890 commencements, down by 16.6 per cent on the previous year, and 22.1 per cent down from the 2020/21 peak.(HIA) Detached house commencements are expected to decline further by 10.9 per cent to a 2023/24 trough of 97,930, which will represent the weakest year since
26 I OPENING SOLUTIONS DECEMBER 2023
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