Following the ABS’ release of building activity data it has accumulated for the September Quarter 2022, the Housing Industry Association (HIA) says labour shortages are contributing to the slow pace of homebuilding nationwide.

The data provides estimates on the value of building work and the number of dwellings that have commenced in that quarter, as well as completed and under construction.

HIA Senior Economist, Tom Devitt says supply chain and material shortages hold some blame for the slowdown, but labour shortages is by far the biggest issue.

“For over two years, Australia’s home builders had been commencing more new projects than they had been completing,” he says.

“There were only 29,153 detached houses completed in the September Quarter 2022, just 2.5 percent up on the same time the previous year. The number of homes reaching completion remains no higher than those being commenced with 29,177 new projects started in the September quarter.

“Supply constraints were holding back completion of these projects. Materials constraints have plagued builders over the last two years, but the shortage of skilled trades is the number one constraint on Australian builders.”

Devitt says that while there are a slew of houses currently under construction, that number will drop significantly due to a shortage of skilled labourers.

“Over 104,000 houses are still under construction across Australia, almost double the pipeline that existed in mid-2020,” he says.

“New house commencements continued to decline in the September quarter with a further 4.9 percent fall. Commencements peaked in the previous cycle in mid-2021 and are expected to continue to decline into 2024.

“The volume of houses under construction is expected to keep Australia’s home builders busy this year, despite the slowdown in the number of homes expected to commence construction.”

Devitt says it's not just the housing sector that is feeling the pinch.

“In addition to this, the volume of multi-unit dwellings under construction continues to grow as commencements exceed completions over the 18 months to September 2022.

“The multi-units sector should continue to be supported by the return of overseas migrants, students and tourists and the incredibly tight rental markets across the country. With interest rates increasing rapidly, affordability constraints will push home buyers back towards more affordable, higher density living.

“This large volume of work under construction at the end of 2022 will ensure elevated demand for skilled trades across the economy.”

Jarrod Reedie

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