In recent days, the home building company, Porter Davis, went into administration, leaving 1700 incomplete homes across Victoria and Queensland. Work on all current builds has come to an immediate halt and a further 779 signed contracts yet to start are facing uncertainty. Another construction firm, Lloyd Group, was also placed in voluntary administration last Friday, affecting 59 NSW and Victorian projects, including many in regional areas, and 200 staff. There is no doubt that the Australian construction industry is under a lot of pressure at the moment, and that is especially true of residential building. A quarter of Australia’s $240 billion residential building sector is locked into fixed price contracts. Ten consecutive interest rate rises have made loans less affordable for consumers and demand for new home builds has declined. Thankfully, the RBA decided not to lift rates again yesterday, and left them steady at 3.60%. Compounding these factors is the skills shortage, and while overseas migration is now surging again, Australia faces a shortage of 106,000 dwellings by 2027.
The National Housing Finance and Investment Corporation (NHFIC) recently released its third flagship State of the Nation’s Housing 2022-23 research report. The report provides data and analysis into housing demand and supply across Australia, as well as long-term projections, with a view to identifying potential drivers of, and challenges to, housing affordability. NHFIC analysis shows housing affordability and supply are likely to remain challenging for some time, and they advocate a holistic approach to mitigate the situation.
An Expert Panel chaired by the Commissioner for Better Regulation is currently undertaking a comprehensive review of Victoria’s building system.The Expert Panel on Building Reform has released its Stage One Report, which can be viewed here.
To help make sense of all of the above, the next ACIF Forecasts will be released on 16 May, with a Forecasts Briefing that day in Sydney. You can book tickets to that event here.
Wishing all a safe and enjoyable Easter break.
Dr James Cameron
ACIF Executive Director