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ECONOMY | It's Heating Up
2019/20 Building Hotspots Revealed
ANGELA LILLICRAP HIA Economist, Housing Industry Association
HIA recently released their 2021 Population and Residential Building Hotspots Report. It is a unique annual report which identifies Australia’s fastest growing suburbs and regional areas – ‘Hotspots’. Areas highlighted in the report enjoy strong population growth and high levels of residential building. For that reason, they indicate areas with strong demand for skilled trades and building materials.
ECONOMIC BACKDROP
The number of homes that commenced construction fell from 196,056 in the 2018/19 financial year to just 171,564 in 2019/20. This was the weakest financial year since 2012/13. The housing market had reached a turning point at the end of 2019 following a return to house price to growth and a round of cuts to the official cash rate.
The housing market was set to enter the new decade looking up until COVID-19 hit. Confidence in the market and the wider economy evaporated as the national borders were closed and local lockdowns enforced. The outlook for home building was dire.
As the full extent of government spending to support households and businesses became clear, including the announcement of HomeBuilder in June 2020, confidence in the housing market returned. Leading indicators of detached building activity surged with new home sales, building approvals and housing finance data breaking records.
A record year for detached house building is underway with over 146,000 detached starts expected in the twelve months to September 2021. This is 20.3 per cent higher than the peak of the previous boom in 2018 and will ensure that the industry remains very active well into 2022.
2019/20 HOTSPOTS REVEALED
This year’s Hotspots Report found a new number one during the 2019/20 financial year. Mickleham–Yuroke in Melbourne has taken the crown from last year’s number one Denman Prospect in the Australian Capital Territory which has been knocked off the national list. Mickleham–Yuroke is in Melbourne’s growth corridor to the north of the city and has been a regular in the National Top 20 Building Hotspots list over the past couple of years along with second on this year’s list: Rockbank–Mount Cottrell.
Third on the national list in 2019/20 is Riverstone–Marsden Park which is a growth area in Sydney and has also made regular appearances in the national Hotspots list over the past several years.
Of the top 20 Hotspots nationally, 11 are located in Victoria with nine of them in Melbourne. Significant infrastructure investment has occurred in this region to accommodate strong population growth in Victoria for several years.
Of the remaining Hotspots, five are in Sydney, three in the South-East corner of Queensland and one in the Australian Capital Territory.
It will be interesting to see if this trend of Victoria dominating the national list continues in future editions of this report. COVID-19 has seen a halt to overseas migration, which is a large part of Victoria’s population growth. A continuation of the internal migration trend that emerged in 2020, which saw an increase in the number of residents leaving Melbourne, presents another risk.
Regional areas are also set to boom. COVID-19 has seen consumer preferences shift away from apartment style living towards lower density housing. The ability to work from home has seen households move to areas that previously would have been too far for a daily commute. HomeBuilder has helped to facilitate this trend towards regional areas.
Given the disruption to population growth and unexpected strength of HomeBuilder, the HIA National Top 20 Building and Population Hotspots list could be in for a shake up next year.
