Fiona Nield
As COVID-19 restrictions have continued to ease in Victoria, HIA has released updated forecasts for home building which gives some insights into how activity levels in the Housing Industry are shaping up in the 2020/21 financial year.
After having the strongest home building market in the country for most of the past decade, the number of new detached homes commencing construction in Victoria is set to fall by 10.4% which is their lowest level since 2013/14.
Victoria has not experienced the same increase in new home sales as other states due to the prolonged second lockdown and not being able to fully capitalise on HomeBuilder. But despite weaker leading indicators, the outlook for Victoria remains solid for the next six months, with HomeBuilder unpinning that activity.
The outlook for the multi-unit market is very poor, with weaker demand due to the pause in overseas migration and other factors including the loss of student and tourist demand and the move of Melbournians to Regional Victoria. HIA therefore expects a 42.4% decline in multi-unit starts this year.
With both detached and multi-units taken into consideration combined total starts are expected in Victoria to be down by 22.7%.
In good news there appears to be a solid outlook for the renovations market in Victoria with households switching their expenditure from travel to home renovations. This trend has been seen across the country and we expect a 6.7% increase in renovations activity. This is a good outcome in light of the enormous shock to the market and also a period of closure for the renovations industry during COVID –19.
Victoria and its economy have been underpinned by very strong population growth over the past decade which has seen ongoing growth in employment in the residential building sector. If population growth doesn’t return in 2021, this will impact the number of new homes commencing construction into 2022. HIA forecasts will be updated again early in the New Year.
State Budget – A Big Spend in Housing, Infrastructure and Training
HIA has welcomed the State Governments big spending budget with a significant investment in housing and infrastructure as well as a boost to improving skills and opportunities to allow Victorians to return to work.
They announced a $6 billion in social housing and associated projects which should provide a much needed stimulus over the next five years for the Victorian economy. But HIA was also pleased to see other housing measures to support home buyers. Included in the announcements was an extension of government’s shared equity scheme allowing home buyers to be able to enter the market with a smaller deposit.
Also, regional first home buyers will continue to benefit from the doubling of the first homeowners’ grant to mid-2021.
Stamp duty changes should also help homebuyers help lower the amounts paid with Victorians set to buy a new home under $1 million have a 50% waiver for new residential dwellings and 25% waiver for purchasing an existing home.
In addition, support for training and apprentices through significant investment in the sector should see an increase in trade numbers, which is also welcomed by HIA.
Fiona Nield is the Executive Director – Victoria – Housing Industry Association
