New report shows stable 1st COVID-19 quarter for housing but harder times ahead.
There is an emerging story here in the latest F2021 Australian Affordable Housing Report: Standard House by PowerHousing Australia and CoreLogic of what construction of a standard house can do to engineer a recovery out of the COVID-19 recession for jobs and housing an uncertain and growing need.
The development of social and affordable housing to meet additional demand will have the dual impact of supporting those struggling in the COVID-19 downturn and drive activity for the 43 construction trade and subtrade jobs in a standard house. It also has profound economic impacts for manufacturing and retail activity throughout Australia.
The real challenge today is that the data shows no clear signs of a downturn in F2020 and any numbers that will indicate an issue for FY2021/22 won’t be published by ABS and others for at least 3-6 months.
There is expectation of a pickup in F2021 forecasts of 15-25,000 dwellings per month on the back of HomeBuilder in F2021 (pulling through some of the substantial pipeline of approvals) but beyond this the drivers for market housing delivery are hard to see.
The report suggests that there will need to be a mix of subsidy/grant in October budget announcements (would have to be made in advance of seeing the full downturn impact) and most likely grant in the May State and Federal Budgets if housing starts are to play any role in supporting the rebuild of the economy. The report considers maintenance, new build and equity options and promotes the impact that the GFC nation building had on kickstarting what was a stalled construction industry in 2009-11.
The Australian Affordable Housing Report: Standard House was previewed and can be seen here on ABC 730.
Some key points:
Housing indicators for the first 3 months of COVID-19 reveal a relatively stable rental, sale and auction market masking deeper macro issues.
• Housing completions at the end of June are forecasted at 180,000, 15,000 homes above 20 year averages.
• Building Approvals for the 3 months Feb-Apr 2020 saw 46,000 dwellings approved alone which would annualise to around 186,000 dwellings approved if carried forward.
• Australian housing appears to be holding up, but there are worrying signs for housing, which will threaten builders, manufacturers, retailers and the broader economy.
• 429,000 loans deferred, 3.3 million on JobKeeper and an effective unemployment rate of over 11% today.
• Foreign investment approvals and Net Overseas Migration which drove record new housing supply has collapsed.
• Initial F2021 residential indicators forecast a massive downturn in new housing delivery, from 230,000 homes in 2018 to 110,000 homes in F2021 – some 120,000 homes fewer impacting jobs.
• 43 trades and subtrades pick up work on every new build of a standard 3 bedroom home – equates to 4.75 million less projected trade engagements in F2021 compared to 2018.
• Residential home building threatened as a major driver of jobs and activity throughout the Australian economy.
• State and federal measures to reduce the severity of the downturn and community housing is ready to provide up to 30,000 dwellings that could be built to support 1.29 million trade engagements and tackle greater COVID-19 social and affordable housing demand.
• Community Housing can act as a ‘shock absorber’ to preserve jobs and tackle increasing demand for housing.