The Housing Industry Association (HIA) has flagged how COVID-19’s shock to the economy will reverberate through to at least 2021, with a heavy impact to be felt in the building industry.
HIA managing director Graham Wolfe has flagged how in 2018-19, the industry engaged more than 1 million workers to commence building almost 200,000 new homes.
“Next year we expect to start just 112,000 new homes, leaving up to 500,000 jobs at risk,” he forecast.
“The shock to the economy from the halting of overseas migration, the absence of student arrivals and uncertainty over the domestic economy will see the market at a lower point in December 2020 than it was during the 1990s recession.”
Mr Wolfe said the industry expects a continuing decline through 2021, even with the return of overseas students and migration.
With employment in the sector not expected to recover within the next two years, he highlighted how the shock will “reverberate through the residential building industry, up and down the supply chain”.
Noting that for the past 20 years Australia’s economic growth has been underscored by stable population growth, Mr Wolfe noted that the loss of the international students and migration has created a temporary imbalance in demand for rental accommodation.
“The 625,000 overseas students enrolled in Australian education institutions equates to demand for the past two years of apartment construction,” he said, noting that it’s also not clear how many of these left in March or how many will return.
According to the managing director, “The nature of this shock requires significant and ongoing support from policymakers in Australia and among our trading partners.”
“The risk that insufficient support will produce a decade of deflation, depression and human hardship is present.”
“This means that of all the concerns facing government right now, debt should not be at the top of the list.
He said that while JobKeeper plays a very important role in supporting workers directly impacted by industry shutdowns, the building industry’s ability to continue operating insofar means many small builders will not be eligible for the program.
But Mr Wolfe expects the downturn will impact the sector most significantly from September 2020 when the majority of projects under construction are completed.
