Around 500,000 construction jobs will be at risk as experts predict a massive drop in demand for new home builds after Covid-19.
The Housing Industry Association anticipates the shock would take force in September and reverberate down the supply chain as dwelling commencements fall from 200,000 to 112,000 next year.
Construction jobs during the pandemic have already dropped by 5.6 percent according to the latest Australian Bureau of Statistics report.
The predicted 60 year low—closing in on 100,000 new builds—was a figure cited by UBS who said this combined with a fall in house prices posed a macro-stability risk.
ASX-listed Stockland and private residential developer Satterley Property Group have also already reported changes in residential demand during Covid-19.
Australian dwelling commencements post Covid-19
HIA managing director Graham Wolfe said the disruption to migration and the elevated rate of unemployment would weigh heavily on demand for residential buildings beyond 2020.
“In financial year terms, dwelling starts in 2019/20 are now expected to be down by 18.3 per cent compared with 2018/19, and starts are forecast to decline by a further 30.5 per cent in 2020/21,” Wolfe said.
“If this transpires, the commencement of new homes will have fallen nearly 43 per cent from last year, to next.”
Wolfe said the building industry was fortunate to continue operating and job keeper had played a very important role however the worst was yet to come.
“Many small builders will not be eligible for the program as the downturn will impact the sector most significantly from September 2020 when the majority of projects under construction are completed,” Wolfe said.
The drop in migration and student arrivals would also have an impact on the construction industry.
“The loss of the international students and migration creates a temporary imbalance in demand for rental accommodation,” Wolfe said.
“The 625,000 overseas students enrolled 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.”