Like every other aspect of our lives, the housing market is not immune to the effects of Covid-19 with apartment commencements forecasted to decline 41 per cent from 71,600 to just 42,100 in 2020-21.
With the contraction, largely focused on high-rise apartments in east-coast cities, according to the Housing Industry Association.
Citing the slower rate of population growth as expected to weigh on the economic recovery and new home starts over the decade, the HIA has forecast starts to be around 172,000 by 2030, compared with 190,000 starts in its previous forecasts.
To give a comparison, the HIA says new home starts peaked at 234,000 in 2016.
“Even with the resilient performance of the Australian economy and the impact of HomeBuilder, the expectation is that the number of new home starts will contract from 173,000 in 2019-20 to 139,700 in 2020-21,” HIA regional director Fiona Nield said.
But it’s the multi-unit market that is expected to bear the brunt of the Covid-19 shock, HIA says in its quarterly economic and industry outlook report.
“The contraction in multi-unit starts will occur sooner and be more pronounced than for the detached market,” Nield says.
In New South Wales, HIA forecast detached dwelling starts to decline by 9.6 per cent to 20,426 in 2020-21. The substantial shock is forecast to be seen in the multi-unit market, down 42.9 per cent, to 15,223 in 2020-2021
Dwelling starts in Victoria are forecast to take a hit, with multi-units starts expected to drop by 53 per cent from 24,263 to 11,410 over 2020-2021. Tough new restrictions on Melbourne construction sites saw the construction sector move to operate under “pilot light levels” earlier this month.
In Queensland, HIA forecasts that multi-units starts will decline by 19.6 per cent, from 9,632 to 7,740, in 2020-2021.“This will leave multi-units starts down by 70.6 per cent from their peak of 26,339 in 2015-2016,” Nield said.Queensland’s detached dwelling starts are forecast to be relatively flat, declining by just 0.8 per cent from 20,027 to 19,866.
In contrast, Western Australia will see an increase in dwelling starts, with a forecast rise of 23.7 per cent to 13,320. Multi-unit starts are forecast to remain relatively flat, with a slight 1.4 per cent decline. “There are early signs that the Western Australian market has responded well to state and federal stimulus measures,” Nield said.
A decline of 2.7 per cent is forecast for South Australia. But unit starts are forecast to fall by 42.8 per cent in 2020-2021.
HIA says the medium-term forecast shows starts gradually recovering from a new trough between September 2021 and March 2022 and returning to 163,500 starts in 2024-25.
Images Nathan Waters via Urban Developer
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