Construction of new homes set to drop by nearly half, says HIA

Experts are bracing for a massive drop in activity in the housing sector, with construction of new dwellings expected to fall nationally by 43%, according to the Housing Industry Association (HIA).

This would put the number of new homes being worked on next financial year at 112,000 – down from nearly 200,000 in FY19.

In NSW, the shock is predicted to be even greater. The HIA report estimates housing starts will drop by 27.5% this financial year and a further 34% in FY21.

HIA regional director David Bare said the coronavirus pandemic has caused fissures all throughout the residential building industry and recovery is not expected for another two years. 

“New South Wales was already in a vulnerable position, with the housing market cooling over the last few years and a significant amount of apartment supply still to come online,” he said.

Travel restrictions currently in place are also a cause for concern, especially in major cities like Sydney and Melbourne where net overseas migration accounts for the majority of population growth.

"The further shock to housing demand from the loss of foreign students, tourists and migrants - who are particularly valuable to the state - is a particularly worrying development,” Bare said. 

"The 625,000 overseas students enrolled in Australian education institutions equates to demand for the past two years of apartment construction. It is not clear how many of these left in March or how many will return.”

Shot in the arm necessary for construction

The current crisis has triggered a dramatic response from the Federal Government, but according to the Property Council of Australia, more needs to be done to restore confidence in the building industry.

Today, the industry body released a seven-point plan to incentivise construction. Among the proposals is a ‘New Home Boost’ scheme, a $50,000 grant offered to purchasers of newly built homes.

Chief executive of the Property Council, Ken Morrison said “some big and bold thinking” is necessary to kickstart the economy and a revitalised property market will play an essential role. 

“As Australia’s biggest employer which contributes over 13% of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments,” he said.

According to the Property Council, the scheme will stimulate the construction of 50,000 new dwellings and create more than 200,000 jobs.

The council also recommends a ‘Welcome to Australia’ migration plan to attract “the skills, people and population growth” the economy needs. 

It would involve a major advertising campaign to promote Australia as a safe and healthy country to study and work in, and incentivise permanent migration by temporarily lowering the points system for permanent skilled migration classes.

Policies like these could help soften the impact of the pandemic in the coming years and put the housing construction sector on more solid footing. 

Citing data from the Australian Bureau of Statistics, the council says every $1 poured into residential construction generates $3 of activity across the broader economy, making it “one of the most powerful job keepers and job multipliers.”

If you’ve got your eyes on the property market, visit our home loans comparison page for an overview of what’s available

Home loan comparisons on Mozo - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
    2.21% p.a.

    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    Go to site
    Details
  • placeholder
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    Go to site
    Details
  • placeholder
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

    Go to site
    Details
  • placeholder
    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

    Go to site
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.