New residential construction forecasts for the next three years are not optimistic, with medium to high density housing bearing the brunt of the downturn. The multi-unit (MU) market has grown significantly over the past 10 years.

As a proportion of total new housing, MU’s peaked in 2019/20 at 41% of housing construction or 71,600 units. This year however, multi-unit is forecast to contribute just 30% to our total construction numbers. At 42,100 units, MU’s will suffer a 41% drop in starts. This sector is impacted on a number of fronts; including a drop in foreign investment, our reduced overseas migration and a shift in housing preferences stimulated by our COVID-19 experience.

According to HIA projections housing starts will drop this year by around 19% to 139,700 and fall again in 2021/22 by another 5%. The market is expected to flatten in the following year and rebound in 2023/24. Keep in mind though that those 2023/24 numbers are projected to sit around 154,000 and remain 11% lower than our 2019/20 starts.

Some promising news is the expectation that interest rates will remain low and lending criteria will relax somewhat over the next couple of years. This will increase market attractiveness for investors and first home buyers, encouraging them back into the market. Due to these factors, the overall housing market is expected to show signs of promise in 2022/23 with housing prices forecast to shift back into positive growth territory.

For manufacturers and suppliers to the residential housing market, some key trends to keep in mind relate to a change in preference of housing type. While overall new housing starts will fall by 19% this year, detached housing starts will drop by less than 4% as consumers indicate a shift back toward detached homes in the suburbs. Some key attributes of this shift? Consumers are looking for dwellings with additional living spaces, studies or office nooks to support working from home, along with larger gardens and outdoor areas.