New residential buildings in the ACT to fall over the next financial year: HIA report

ACT residents can expect to see a decline in new builds, according to a report which forecasts new dwellings in the ACT to fall by 28.4 per cent this financial year and a further 29.4 per cent in 2020-21, as a result of the COVID-19 pandemic.

The Housing Industry Association’s revised quarterly economic and industry outlook report, released last week, noted the effects of the pandemic would be felt throughout the entire industry.

“This shock will reverberate through the residential building industry, up and down the supply chain. Employment in the sector is not expected to recover within the next two years,” said HIA’s regional director Greg Weller.

The report found that detached houses would hold steady over the next financial year but the number of new apartment builds was expected to drop dramatically.

In 2018-19, there were 1345 new houses; this financial year 1230 and the next financial year was expected to see that decline to 1163. 

Meanwhile, in the apartment sector, new dwellings are expected to plunge from 4662 in 2018-19 and 3069 in this financial year to 1871 in 2020-21.

Overall, new buildings in the ACT could almost halve from 6007 in 2018-19 to 3034 in 2020-21.

On a national level, new dwellings are expected to fall by 43 per cent.

According to Mr Weller, the ACT entered the pandemic in a strong position with economic and population growth propelling demand for housing.

However, despite the city’s “stable public employment base” protecting it, ACT would soon go into a vulnerable position with the loss of overseas migration and international student arrivals, Mr Weller said.

“The loss of international students and migration creates a temporary imbalance in demand for rental accommodation. The 625,000 overseas students enrolled nationally in Australian education institutions equates to demand for the past two years of apartment construction. It is not clear how many of these left in March or how many will return,” he said.

Mr Weller noted that the “uncertainty over the domestic economy would see the national market at a lower point in December 2020, than it was during the 1990s recession”.

“It will then continue to decline though 2021, even with the return of overseas students and migration.”

Despite the statistics, Hindmarsh development manager Mia Dragila said demand for new homes “has not dried up”.

“We are in a low-interest rate climate and, all things considered, Canberra is still faring well in terms of employment,” Ms Dragila said.

“New builds must continue in order to stimulate the economy, avoid a shortage of supply, and to support employment.

“There are multiple developments in the ACT at various stages of their development cycle … there are also developments which are just about to receive DA approval and may not have been launched to the market yet.”

If these projects did not commence, it would lead to a shortage of supply in stock and drive prices up, Ms Dragila said.

According to internal Allhomes data, between May 18 and May 24, 2020 the total number of inquiries for new developments surged by 129 per cent, compared to the same period a year ago; and views on new development listings also increased by 130 per cent – an Allhomes record.

“There is no doubt that there will be challenging times ahead, and this is not unique to our industry. As an industry, we have the opportunity to respond and adapt, and this is critical in challenging times,” Ms Dragila added.

“The property market is a significant driver of the ACT economy, not only creating new homes for both owner-occupiers and tenants but also as the second-largest non-government employer.”

Ms Dragila said if the federal government implemented incentives and policies to protect the housing industry, it could be a “driver of economic recovery and growth”.

“The key to riding out the storm is to keep momentum, and to do so we need to be proactive,” she said.