Confidence grows of ongoing housing supply despite small decline in activity & QLD fears

Master Builders Australia today released an update to its forecasts for the building and construction industry out to 2027-28. The forecasts provide a deep dive into the current economic conditions of the industry, providing an activity projection over the next five years.

Master Builders Australia CEO Denita Wawn says the building and construction industry is the canary in the economic coal mine and activity will be very dependent on the macroeconomic environment.

“Despite an economically volatile 2022-23, the industry has demonstrated its resilience with total construction activity across Australia expanding by 3.8 percent to $226.4 billion with most of the heavy lifting done by the non-residential and civil construction sectors.

“Housing has been at the forefront of public debate this year with the current challenges deeply rooted in the market,” says Wawn.

“Master Builders forecasts new home building activity is currently declining, it is estimated work began on just 173,755 new homes during 2022-23, a 16.5 percent decline on the previous year,” she says.

“2023-24 will see home starts decline by another 2.1 percent to around 170,100, well below the 200,000 needed per year to meet population growth.

“However, this will likely be a bottoming out point as supply bottlenecks loosen and we return to a more desirable investment market on the demand side,” she says.

“We forecast new home starts will peak to just over 241,000 in 2026-27.

“In good news, the projected volume of new starts over the five-year period up to 2027-28 exceeds the one million home target under the Housing Accord but only just.

“Non-residential building activity is likely to hit a peak during 2023-24 when $54.27 billion worth of work is carried out. We then expect a slow decline with activity, falling to $51.01 billion in 2027-28.

“During 2022-23, $103.17 billion worth of work is estimated to have been carried out in the sector.

“We forecast activity to peak at $124.33 billion during 2024-25 with resource and major transport infrastructure projects doing much of the lifting to get us there before activity sinks back quite heavily, falling to $106.42 billion in 2027-28,” Wawn notes.

However its not all positive news for the hosuing sector. 

According to SkyNews, Queensland could buckle under increased housing pressure supply as further international migration of students continues into the state.

Data from the Education Department shows the Sunshine State recorded a 41 percent spike in international students in the first six months of the year, equivalent to around 40,000 people, says SkyNews.

The report goes on to say that the housing market conditions are remarkably tight as rental vacancy rates continue to decrease, with rental prices increasing in multiple areas around Queensland.

This comes as the state recorded vacancy rates in all but four regions across Queensland, which have dwindled to below 1 percent, says SkyNews.