Labour shortages continue to impact homebuilding

by | Jan 23, 2023

The Australian Bureau of Statistics (ABS) has recently released its building data for the September Quarter of 2022 this year. The data provides estimates of the value of building work and the number of dwellings commenced within this timeframe, completed and under construction, across Australia and its states and territories.

HIA Senior Economist, Tom Devitt stated, “For over two years, Australia’s home builders had been commencing more new projects than they had been completing.”

“There were only 29,153 detached houses completed in the September Quarter 2022, just 2.5 per cent up on the same time the previous year. The number of homes reaching completion remains no higher than those being commenced with 29,177 new projects started in the September quarter,” added Mr Devitt.

He says that supply constraints were a factor in holding back the completion of these projects, however, were not the only factor causing a negative impact.

“Materials constraints have plagued builders over the last two years, but the shortage of skilled trades is the number one constraint on Australian builders. Over 104,000 houses are still under construction across Australia, almost double the pipeline that existed in mid-2020.”

“New house commencements continued to decline in the September quarter with a further 4.9 per cent fall. Commencements peaked in the previous cycle in mid-2021 and are expected to continue to decline into 2024,” Mr Devitt said.

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 according to Mr Devitt.

“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. The multi-units sector should continue to be supported by the return of overseas migrants, students and tourists and the incredibly tight rental markets across the country.”

“With interest rates increasing rapidly, affordability constraints will push home buyers back towards more affordable, higher density living. This large volume of work under construction at the end of 2022 will ensure elevated demand for skilled trades across the economy,” concluded Mr Devitt.