HIA’s 2022 federal election imperatives set out the key issues we believe an incoming government must address if we are to sustain the benefits of stronger new home building activity well into the future to support the Australian economy and most importantly, help first home buyers move into their own home.

While no one could have predicted the impact COVID-19 would have on housing – both new and existing – the essence of the COVID-19 shock for all Australians has been to reaffirm that home ownership matters now more than ever.

Housing outlook

There is an exceptionally high level of residential construction underway across new home building and home renovations. This is the culmination of low interest rates, fiscal policy measures promoting economic recovery following the pandemic and a marked shift in household spending patterns. Households increased their savings and increased expenditure on their homes during the pandemic.

Leading indicators imply that a high level of home building activity will be sustained throughout 2022. Looking further ahead, a shift away from the expansionary monetary and fiscal policy settings are expected to see household’s reduce expenditure on their homes.

The number of new homes that commenced construction in 2021 was comparable to the all-time high recorded in 2016. Yet this cycle differs from the 2016 cycle in that activity is driven by a record volume of detached house construction which is geographically dispersed rather than a boom in capital city apartment construction.

This cycle had been characterised by elevated levels of demand, constrained supply and a rapid escalation in input prices. The spike in demand for new homes has exacerbated many of the supply side issues that have perpetually challenged the industry, such as the shortages of skilled trade workers and a lack of shovel ready land for housing. Disruptions to international supply chains and domestic and international freight have presented additional challenges.

The industry is set to face further challenges in 2022 and beyond as substantial changes to the National Construction Code are scheduled to be adopted.

There has been a marked shift in the housing market dynamics during COVID-19. Vacancy rates remain low despite the halt to overseas migration and high level of home building.

Changes in household spending patterns and newfound ability to work from home have changed the way people live. People have sought more ‘breathing space’ with some households seeking larger homes to accommodate space for work, others moved out of cities to regional areas while others created new households in order to reduce household density.

Now is the time to review the nation’s housing supply strategies taking account of these changes and challenges.

Housing affordability has deteriorated further over recent years which is the enduring legacy of the past policy failures that have impeded the efficient supply of housing over several decades. The Australian Government must have the ambition to set the country on a path to make sustained improvements in housing affordability and ensure that home ownership is an attainable aspiration for all Australians.