Factors such as the former Coalition government’s HomeBuilder scheme saw new house starts rise to 149,000 in 2021.
However, the Housing Industry Association (HIA) forecasts that just 96,310 houses will be built in 2024, due to the impact of rising interest rates. This would be the first fall in house commencements to below 100,000 a year in more than a decade.
The HIA then expects house starts to rise to 97,820 in 2025 and 105,179 in 2026.
Meanwhile, the HIA forecasts that 82,360 new apartments will be built in 2024, rising to 84,560 in 2025 and 86,410 in 2026. This will be driven by affordability constraints, rental shortages and large inflows of overseas migrants and students.
“The 2022 cash rate increases were sufficient to bring this building boom to an end and further increases in 2023 will accelerate this downturn”, said Tim Reardon, HIA chief economist.
“While there remains a record number of homes under construction, this will shrink quickly as market confidence continues to fade”.
The HIA’s forecasts are concerning given Australia faces record immigration inflows this year and the next.
Unless something changes, Australia is facing an unprecedented housing shortage as demand via immigration easily outpaces supply.
