A 20-year record in new home building is set to be broken this year, with 190,000 new homes to be commenced over 12 months.
This surpasses the previous record back in 1994, when 187,000 new homes were built.
HIA chief economist Harley Dale said this particular circumstance was different to previous growth cycles in residential construction.
“The growth in new residential construction has been slower to gather momentum and breadth, in terms of both geographical location and dwelling type, so the ‘look and feel’ of this cycle is different to historical experience,” he said.
“The momentum culminating in this milestone has provided a substantial boost to Australia’s economy at a crucial juncture in the cycle. Below trend economic growth and weak labour market outcomes would be considerably worse without the reach a new home building recovery is exerting into the broader economy.”
Record low borrowing costs and high net overseas migration has unleashed pent-up demand, driving new home construction, said Dale.
However, despite breaking a 20-year record, the economy is not in the clear just yet.
“These factors will keep the level of new homes commenced at historically elevated levels. However, what the economy needs is further growth in new home building over the next couple of years, but that will only occur as a consequence of taxation and regulatory reform,” he said.
“It is still an impressive achievement to build a record number of new homes, at a level that approaches what the average build rate will have to be if we are to adequately house our growing and ageing population in coming decades.”
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