The end of Australia’s home-building boomFriday 24 Nov 2023 Australia’s residential construction boom is petering out as the higher cost of financing new homes blunts buyer appetite, leading to a slowdown in much-needed housing supply, according to a survey of analysts and economists. Jarden chief economist Carlos Cacho expects residential construction activity to slow materially next year, “particularly as the current pipeline of work reaches completion around March 2024”.“We also see an elevated risk that not all of the current AU$76 billion of residential work reaches completion, given high construction costs and interest rates could see elevated cancellations,” he said. Mr Cacho expects housing starts to fall from 172,000 in the 2023 financial year to 154,000 in FY24, before recovering to 166,000 in FY25. That’s bad news for the federal government’s ambition for 1.2 million new homes to be built over the next five years. Jarden estimates the current run implies a 15-20 per cent shortfall on that target. “The record rate of construction failures likely means potential buyers will remain cautious when considering new housing and mean that despite solid underlying demand, new housing sales remain subdued,” he said. SQM Research founder Louis Christopher agreed, saying residential construction “is bottoming out as we speak”. “The federal government’s push for 1.2 million dwellings is creating some confidence, along with a fall in raw material costs. But what is in the pipeline now will still fall well short of long-term averages.” More >> Source: AFR |
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