![\"Demand](\"https:\/\/fmsto.blob.core.windows.net\/cms\/images\/055\/0004_637728936706339849.jpg\")
<\/p>\n
The residential construction sector will continue to remain busy next year, as pent-up demand due to the lockdowns rolls out.<\/p>\n
Housing Industry Association chief economist Tim Reardon said it appears the interest towards lower density housing remains heightened and will continue to be so over the coming year.<\/p>\n
\u201cThis shift is not just those in units moving to detached housing but includes a shift to fewer people per household,\u201d he said.<\/p>\n
\u201cAs a result, we have seen a significant change in the volume, type and location of new homes. These trends are similar in other countries.\u201d<\/p>\n
New home sales still growing<\/h2>\n
Over the three months to October 2021, sales of new homes increased significantly in Western Australia (45.8%) and New South Wales (42.3%).<\/p>\n
Queensland also recorded a decent growth of 2.1% during the period, while South Australia and Victoria reported declines.<\/p>\n
Overall, new home sales across Australia increased by 11.1% during the period.<\/p>\n
\u201cSales since the end of HomeBuilder are the strongest they have been since 2017 when over 115,000 detached homes commenced construction,\u201d Mr Reardon said.<\/p>\n
\u201cThis strong level of home building activity suggests that the current boom in residential construction will be sustained throughout 2022.\u201d<\/p>\n
Approvals remain on an uptrend<\/h2>\n
According to the Australian Bureau of Statistics, detached home approvals over the September quarter was up 15.5% from the same quarter last year and 32.2% from 2019.<\/p>\n
Mr Reardon said the shift to lower density housing is also fuelling the demand for multi-units.<\/p>\n
Over the same quarter, approvals for multi-unit apartments increased by 34.2% annually.<\/p>\n
This growth was driven by the demand for both medium density housing and high-rise apartments<\/p>\n
\u201cInvestors are looking through the haze of the pandemic to a brighter outlook on the other side,\u201d Mr Reardon said.<\/p>\n
\u201cAffordability constraints are also pushing households, particularly first home buyers, back to townhouses and apartments.\u201d<\/p>\n
Construction costs to be a challenge<\/h2>\n
The construction industry will, however, not have a smooth-sailing ride next year as costs continue to rise.<\/p>\n
\u201cThe industry will continue to run at capacity throughout 2022, constrained by the availability of land, labour, and materials,\u201d Mr Reardon said.<\/p>\n
Over the year to September, prices of skilled trades and materials increased by 5.2% and 8%, respectively.<\/p>\n
Meanwhile, the price of residential land increased by 8.5%.<\/p>\n
\u201cThis has led to an increase in the cost of a new house and land package,\u201d Mr Reardon said.<\/p>\n
\u201cThese cost increases have not led to constraints on access to finance, as the cost of an established home has increased significantly faster.\u201d<\/p>\n
\u2014<\/p>\n
Photo by Mark Potterton on Unsplash.<\/p>\n<\/p><\/div>\n
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