RBA Sees Residential Construction Rising Further, Boosting Costs
New-home building is set to rise further in coming months and remain elevated for the remainder of the year, the Reserve Bank of Australia said in documents dated from April released under Freedom of Information.
“This has led to construction delays and higher input costs, which are beginning to flow through to prices for detached housing,” the RBA said in a section titled ‘liaison on current conditions.’” “Housing starts are expected to peak around May in most states. However, the peak is expected to be closer to September in New South Wales, reflecting longer time to commencement.”
Housing construction in Australia has been turbo-charged by a A$25,000 ($19,000) federal government grant that was bolstered in a number of states. The government was forced to extend the timeline for recipients to begin building to 18 months from six in order to avoid even severer bottlenecks emerging in the industry.
“Elevated construction activity both domestically and overseas has led to a shortage of key building materials -- steel, timber, concrete, bricks and roof tiles,” the RBA said in the documents Friday. “Strong demand for new detached housing is also putting pressure on sub-contractor availability and rates.”
Construction is one of the largest employers in Australia. The government’s HomeBuilder program was designed to stimulate activity in order to revive the economy and increase employment as it emerged from Covid lockdown.
This has caused delays in construction and the large cost increases are beginning to flow through to house prices, according to the FOI documents.
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