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Detached house starts are booming, but materials supply problems causing delays in work done
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Macromonitor is currently finalising the latest forecasts for our new report, Australian Construction Outlook – Residential Building. This note will show some top-level preliminary forecasts from the forthcoming report.
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A key issue we are tracking at present relates to delays in completion of new houses, primarily as a result of delays in securing timber and other materials.
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The number of houses approved surged during 2020/21, stimulated by the Federal Government HomeBuilder grant. The number of approvals reached 42,000 in June quarter 2021, and 155,000 for the year to September 2021 - both the highest numbers on record. The monthly peak in approvals was in March 2021, and the number has been in decline since then.
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The large volume of work represented by this record level of approvals will take much longer than usual to get done, however, as a result of major materials shortages and delays.
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The charts below show the latest data (up to June quarter 2021) and our forecasts out to June 2023, in quarterly terms. The charts show the actual data and forecasts, as well as an indication of what commencements and work done would have been under normal conditions; i.e. with the usual lags between approval, commencement and work being done.
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Looking at the first panel above, this shows a small discrepancy between actual commencements and the level that would have been expected in normal circumstance, mainly in the March quarter of 2021. The number of detached house starts, nationally, jumped from 33,000 in the March quarter of 2021, to 41,000 in the June quarter, taking the number of starts to a level more-or-less in line with what we would have expected. We expect the number of starts to decline from here, in line with the trend we are already seeing in approvals.
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The trend in work done is quite different however. While houses might now be, technically, getting started on a normal timeframe, it is taking considerably longer than usual for those starts to translate into actual work done.
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In the March and June quarters of 2021 we estimate that the actual work done was between $1 billion and $1.5 billion lower, in each quarter, than it would have been under normal circumstances (i.e. based on the usual lags between commencement and work done). This means that the upturn will last much longer in work done terms, as the big backlog of house building gets done. We expect the peak level of detached house building work done to last through to June 2022. During 2022/23 however, we anticipate a large downturn, even though there will still be a continuing backlog of work.
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For more detailed forecasts and analysis, please subscribe to our forthcoming report - Australian Construction Outlook – Residential Building – November 2021.
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This latest list of projects corresponds with our fully revised set of forecasts published in November 2023.
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Australian Regional Construction Outlook
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Our latest regional forecasts for residential building and construction have just been released.
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Australian Construction Materials Forecasts
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Our latest forecasts assess the implications for construction materials demand of the current outlook for building and construction.
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Australian Road and Bridge Works
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This report examines the strength and composition of the current upturn, and determines the likely timing of the peak, and subsequent decline.
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