About 26,000 new homes are ‘missing’ in Australia, which has just experienced one of the biggest housing booms in history.
Single-family construction will surge in 2020 and 2021, with 100,000 single-family homes currently being built around Australia.
This is a significant increase from the nearly 60,000 constructions per year seen pre-pandemic and is the highest level ever recorded.
This huge pipeline of residential buildings is the result of two things.
First, there was a wave of launches in late 2020 and into 2021 against the backdrop of low interest rates and the HomeBuilder program.
HomeBuilder is a government stimulus during Covid that offers up to $25,000 to eligible owners to build a new home, significantly renovate an existing home, or make an unplanned purchase. did.
There are many new homes that are “missing”.Photo: Getty
An increase in construction starts bloats the under-construction pipeline simply because there are more homes under construction.
But there’s more going on here. The increase in pipelines under construction is much greater than the increase in starts itself implies.
Instead, the second factor is that it’s not. completion Construction at the kind of pace we normally expect. In other words, it’s taking longer to build a house than it used to.
Completion of single-family homes usually tracks commencement fairly well.
That’s not surprising. The time it takes to build a house is usually fairly consistent, especially compared to things like apartments, which vary greatly in size and type of unit development.
ABS estimate This means that it usually takes two-quarters to one-third of the time from the start of construction to the completion of a single-family home.
To get an idea of how far behind we are, we extrapolate a simple mapping equation that maps start to finish based on what has been the typical lag between the two in the past. 
Its historical relationship suggests that completion should have been many It’s been higher in the last year or so.
In summary, the gap between what we normally expect to have completed in the last five quarters and what we are achieving today. actually 26,000 houses completed.
In other words, two-thirds of the pipeline growth seen in the last two years is likely due to longer construction periods.
To put it another way, if you were building homes in a normal timeframe, the pipeline of homes under construction would be around 75,000 to 80,000 homes instead of 100,000 or more. It will still be expensive, but much closer to what is typical.
There are many reasons why homes are taking longer to build, such as disruptions caused by weather and disease, and limited availability of materials due to disruptions in international supply chains. Rapidly Rising Building Costs.
A strong pipeline and long construction period means that construction activity could last longer than normally expected when the Reserve Bank raises interest rates.
most housing construction interest rate sensitive Being part of economic activity, it is usually expected to slow down when interest rates rise.
It happens.we have already seen Slow building approval and start The situation during the pandemic is vastly different. But given the amount of work yet to be completed, the decline in activity will probably be slower and slower than usual.
 Specifically, we regress completions at the 2nd, 3rd, and 4th lags of log-level starts. Constrain the starting three lag coefficients to sum to one.