Apartment slowdown puts 1-million home target at risk

Longer construction times that are already slowing new apartment projects will worsen Australia’s housing shortage as immigration picks up, and any further increase in rates will hamper investment and put Australia’s target of 1 million new homes at risk, the Housing Industry Association says. In its latest set of quarterly forecasts, the lobby group for large volume builders said Australia was on track to achieve 965,760 homes over the five years to 2028 – only 35,000 below the federal government’s target – but warned that a higher benchmark lending rate would make this unlikely. “If [the Reserve Bank of Australia] continues to increase the cash rate in 2023, this forecast will be downgraded significantly,” the HIA said on Wednesday. “Households have only seen half of the increase in the cash rate impact their monthly mortgage payments.” The report repeats comments the lobby group made last week calling on the central bank to not lift the cash rate target above the current 2.85 per cent. But its detailed forecasts show the importance of apartments in offsetting the coming slump in detached home-building as the hangover caused by higher borrowing costs and the end of incentive schemes such as HomeBuilder kicks in. With detached housing starts likely to drop to 101,000 in 2025 and only recover slowly from there, the need grows for more attached dwellings: apartments, townhouses and semi-detached homes. Supply will grow but not fast enough. The HIA says so-called multi-unit starts will jump to 81,550 this year from 73,920 last year as constraints on labour and

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