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Surge in new home approvals is great news for jobs

Samantha Menzies
·Contributing editor
·4-min read
Housing construction jobs are about to surge in demand. Source: Getty
Housing construction jobs are about to surge in demand. Source: Getty

A surge in demand for new homes across the country, and a record-high month for detached building approvals is good news for those looking for work but will put added pressure on the construction industry.

According to the Housing Industry Association (HIA), approvals in February reached their highest level on record since the ABS began the series in 1983, chiefly driven by the government's HomeBuilder scheme.

HomeBuilder provides eligible owner-occupiers (including first home buyers) with a grant to build a new home, substantially renovate an existing home or buy an off the plan home/new home.

HomeBuilder provides a $15,000 grant for eligible contracts entered into on or after 1 January 2021 until 31 March 2021 (inclusive). A $25,000 grant is available for eligible contracts entered into on or after 4 June 2020 up to and including 31 December 2020.

The three months to February are also a record period, by a significant margin. Detached house approvals in the three months to February 2021 were 50.7 per cent higher than the same time last year.

The number of detached dwelling approvals during the three months to February 2021 compared to the same time last year were highest in Western Australia (+138.6 per cent) followed by South Australia (+67.7 per cent), Queensland (+51.0 per cent), New South Wales (+32.0 per cent) and Victoria (+28.4 per cent). In original terms, they improved in the Northern Territory (+86.1 per cent), Tasmania (+69.9 per cent) and the ACT (+57.0 per cent).

The new data shows an elevated level of demand following the announcement of HomeBuilder in June 2020. 

"New home sales spiked in December as home buyers rushed to meet the deadline of the first phase of HomeBuilder [and] new home sales in March are expected to be comparable to those in December 2020 as home buyers rush[ed] to meet the deadline for the second – and final – phase of HomeBuilder," HIA chief economist Tim Reardon says.

Good news for workers

And the record volume of approvals, which is expected to translate into a surge in the volume of work will see home building absorb workers from across the economy in 2021 and into 2022, Reardon explains.

This is particularly good news since the national wage subsidies - JobKeeper and JobSeeker - ended on 31 March with expectation a significant portion of the population will now be forced below and poverty line and remain without work.

Delays ahead

Without an influx of new workers into the building sector, Australians building a new home or renovating could face long delays as busy builders deal with soaring demand and shortages of building supplies and skilled trades.

Builders on the ground are already having trouble starting or completing builds on time, with 82 per cent reporting delays in getting building supplies or access to qualified tradies, HIA research showed.

Results from a recent Master Builders Australia survey also supported the trend, showing that 78 per cent of builders faced a three-week delay for key trades.

“Different regions are facing different challenges but they are all facing impediments to the number of homes they can start construction on,” Reardon told Domain. “There’s really three constraints and they are land, labour and lumber.”

About 20 per cent of the timber used to build homes in Australia is sourced overseas and the pandemic had interrupted its production. This has led to fierce competition for supplies, with other countries seeing delays in this and other building materials, he added.

Reardon also said the problem would get worse as the tens of thousands of people who had signed up to build, looked to get their projects started in time to qualify for HomeBuilder.

Unit approvals lag behind

“This positive outlook for detached home building is in stark contrast to that of the multi-unit sector. The absence of overseas migrants and students will continue to impede multi-commencements," Reardon says.

Multi -unit approvals remain lower by 21.6 per cent compared to the same quarter last year. Multi-unit projects that are gaining approval at this time are likely to have commenced the planning and building approval process before the pandemic. 

“The apartment market is likely to be constrained until overseas migration returns,” Reardon claims. 

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