The housing sector will also remain busy next year as pent-up demand from the lockdowns rolls out.

Tim Reardon, chief economist for the Housing Industry Association, said it appears that interest in lower-density housing continues to increase and will continue to do so in the coming year.

“This shift is not just that in units moving to detached homes, but includes a shift to fewer people per household,” he said.

“As a result, we see a significant change in the volume, type and location of new homes. These trends are similar in other countries.”

Sales of new homes are still growing

In the three months to October 2021, new home sales increased significantly in Western Australia (45.8%) and New South Wales (42.3%).

Queensland also posted a decent 2.1% growth over the period, while South Australia and Victoria reported declines.

Overall, new home sales across Australia increased by 11.1% over the period.

“Sales since the end of HomeBuilder are the strongest since 2017, when more than 115,000 detached homes began construction,” said Mr. Reardon.

“This strong level of housing activity suggests that the current housing boom will continue into 2022.”

Approvals continue in an uptrend

According to the Australian Bureau of Statistics, approvals for detached homes in the September quarter were up 15.5% from the same quarter last year and 32.2% from 2019.

Mr Reardon said the shift to lower-density housing is also fueling demand for multi-units.

In the same quarter, approvals for multi-family homes rose 34.2% per year.

This growth was driven by demand for both medium-density housing and high-rise apartments

“Investors are looking through the haze of the pandemic to a brighter outlook on the other side,” said Mr Reardon.

“Affordability constraints are also pushing households, especially first-time homebuyers, back to townhouses and apartments.”

Construction costs a challenge

However, the construction industry will not be smooth sailing next year as costs continue to rise.

“The industry will continue to operate at capacity in 2022, constrained by the availability of land, labor and materials,” said Mr Reardon.

In the course of the year to September, prices of skilled crafts and materials increased by 5.2% and 8%, respectively.

Meanwhile, the price of residential land rose by 8.5%.

“This has led to an increase in the cost of a new house and parcel of land,” said Mr Reardon.

“These cost increases have not resulted in restrictions on access to finance as the cost of an existing home has risen significantly faster.”

Photo by Mark Potterton on Unsplash.

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