Master Builders ACT forecasts slump in residential dwelling construction in Canberra

According to forecasts from Master Builders Australia, new residential dwelling starts in the ACT are expected to fall from 5810 in 2022 to 5000 in 2024, before recovering to 6000 in 2026.

The forecast, which includes units and detached houses, comes off the back of strong growth in new dwelling starts over recent years.

Master Builders ACT CEO Michael Hopkins said the forecast reflects widespread inflationary pressures and labour shortages, as well as land supply constraints.

"Local residential construction is being constrained by the ACT's tight land market, slow land release policies and bottlenecks in the planning approval process," he said.

"The current and predicted level of residential construction is not sufficient to keep up with Canberra's forecasted population growth."

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The drop in new dwelling starts will mostly be felt in the apartment sector, the forecast shows, with new-build detached houses increasing slightly in 2022, before returning to around 1500 in 2023.

The forecast comes at a time when the construction sector is facing supply chain disruptions and workforce shortages.

Serene Teoh is the director of Canberra-based construction company Forever Build Love. She said while the company has several builds underway, some sacrifices have been made to keep them going.

"We had to turn to steel because timber was not available," she said.

Ms Teoh said the group doesn't expect to make "a major profit" in this time.

"Our clients have been very reasonable, some of them actually offered to pay more just so that we can get the builds going," she said.

"At the end of the day it is the relationship between the client and the builder that keeps the build going."

Ms Teoh said the lack of land available to Canberrans would be a "main driver" for subdued building activity in the coming years.

Mr Hopkins said the construction industry is pushing for planning reforms to remove barriers to new housing approvals.

"Reforms which encourage a mix of housing types located close to infrastructure and services in established suburbs have been commonplace for years in many other parts of Australia, yet even building dual occupancies on RZ1 blocks in Canberra remain contentious," he said.

The forecast estimates ACT construction activity will average $3.8 billion each year to 2026 and will sustain a local workforce of at least 20,000 people.

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