What’s in store for Housing in 2022
As we turn our thoughts to the year ahead, HIA has been crunching the numbers around likely demand for housing in 2022.
We have been watching the new home sales data – particularly as the HomeBuilder grant ended to see where the numbers would land.
But demand for detached housing, post HomeBuilder has surprisingly remained strong. This suggests that in Victoria, the current boom in residential construction will be sustained throughout 2022.
“In Victoria, more than 14,000 new detached houses commenced in the June 2021 quarter and 46,300 in the 2020/21 financial year, the highest on record.”
In terms of housing preference, there has been a clear shift towards lower density housing during the pandemic and this trend does not appear to show signs of slowing.
This shift is not just those in units moving to detached housing but includes a shift to fewer people per household. As a result, we have seen a significant change in the volume, type and location of new homes.
The industry should continue to run at capacity throughout 2022, but it will be constrained by the availability of land, labour and materials.
The price of skilled trades in Victoria increased by 6.0 per cent in the year to September, while the price of materials as measured by the ABS increased by 10.2 per cent.
The price of residential land also increased by 14.6 per cent in the 2020/21 financial year. So this has led to an increase in the cost of a new house and land package.
But these cost increases have not led to constraints on access to finance, as the cost of an established home has increased significantly faster.
“The full impact of the loss of migration is yet to fully impact demand for detached housing and a rise in interest rates will most likely mark the end of this COVID building boom.”
Renovations activity is set to continue to surge with the easing of lockdown restrictions. With more time spent at home during the pandemic, we are seeing demand for additional living and working spaces.
But affordability constraints seem to have pushed households, particularly first home buyers back to townhouses. Multi-unit approvals in Victoria increased by 22.1 per cent in the September 2021 quarter to be 6.1 per cent higher than the same time last year.
As a result, the outlook for multi-unit construction in Victoria has improved – but remains weak compared to the pre-COVID levels due to the lack of population growth.
Coming out of the pandemic, we hope that this provides good news for the industry and you will be able to go forward in your businesses in the year ahead.
Wishing you all a wonderful Festive Season and the very best for great success in 2022.