Australia is one of the few countries that has successfully contained the coronavirus outbreak. However, the prolonged lockdown, labour and material shortages have slowed growth, particularly in the major construction sectors.
According to the Australian Housing Industry Association (HIA), the current development boom will peak in mid2022. It voiced concern in its most recent outlook that the approximately 33% increase in building projects since 2019 will have an impact on the industry’s sustainability.
The forecasts come as builders’ associations cautioned that the present rate of construction was concealing shortages that were destroying potential earnings. Even if borders open, there are fears that two years of limited population growth will substantially impact the business.
According to the analysis, homes took twice as long to build during the pandemic and national construction boom, and while lockdowns created a challenge, they were not a significant source of the delays. Instead, the core difficulties were rising prices and timelines due to labour and material shortages.
The government’s HomeBuilder Program, which gave grants of up to USD25,000 for construction and home improvement projects, has fuelled demand. As a result, the time required to construct a home has risen substantially, from seven to nine months to twelve months or more.
The Way Forward
According to the HIA, new constructions will fall to 125,030 in the 2019 fiscal year as the industry begins to suffer the effects of two years of poor population growth, increased building prices, and the ending of the HomeBuilder Programme.
The Association of Professional Builders expressed similar concerns, noting that despite an oversupply of work, increased supplier costs and delays caused by lockdowns meant that many in the industry were losing money. According to the Association, up to 60% of operators were losing money due to excess demand, causing shortages, which eroded net profits.
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