Construction Workers Wanted
The average 80,000 dwellings per year needed to achieve the government’s target would be a 34% increase over and above the 59,000 dwellings averaged over the last 10-years.
To build this, our construction workforce capacity would need to increase by 15% (approx. +50,000 jobs) over the 2022 employment figure.
Historically Victoria’s construction workforce has grown by an average 3.5%. The reality is employment can’t jump by 15% between now and 2024. To achieve the government’s target by 2034, employment will need to gradually increase and eventually exceed the average level.
If the State Government really wants to achieve this target, we will need to look at ways to boost labour force capacity and productivity in the construction sector on top of streamlining the planning system
Employment will need to grow at an average rate of 4.2% per year to 2034 in order to deliver the 800,000 dwelling, approximately +191,000 jobs by 2034. This assumes a linear increase in dwelling completions, at a rate of 6.2%, peaking at 103,500 dwellings completed in 2033 and no change in productivity.
Competing demand from other sectors will add additional pressure in the market and will likely mean employment needs to grow even faster. This has obvious implications for labour availability/costs (Housing Industry Australia Trades Index is already negative) and in the context of already rising dwelling construction costs could undermine commercial feasibility.
Residential Market Impacts
VIF 2023 estimates a need for 56,000 dwellings per year to support population growth between 2024 and 2034. This implies (if achieved) the State Government’s target will deliver 240,000 dwellings to 2034 over and above the forecast requirement. While this will help to balance the historical under-supply of housing, other potential impacts include:
- Induce population growth – If affordability relative to Sydney increases, we could see higher levels of interstate migration from NSW.
- Reduction in household sizes – Affordability will also encourage young people to move out sooner and reduce the need for share houses.
Impacts to the housing market will ultimately vary depending on where these dwellings are delivered. We’ll be watching closely to see what policies the State Government puts forward in the Plan for Victoria, in relation to the 70/30 infill-greenfield targets.
- The average 80,000 dwellings per year needed to achieve the government’s target would be a 34% increase over and above the 59,000 dwellings averaged over the last 10-years.
- Our construction workforce will need to grow at an average 4.2% per year, approximately +191,000 jobs by 2034.
- Historically Victoria’s construction workforce has grown by an average 3.5% – a significant boost will be needed to achieve the housing target. An under supply of labour could impact already under pressure construction costs.
- The Victorian State Government’s target of 800,00 dwellings is 240,000 more dwellings than the VIF 2023 dwelling forecast (by 2034).
- If affordability relative to Sydney increases, Victoria could see higher levels of interstate migration from NSW. More affordable dwellings could also lead to a reduction in household sizes.
We are always monitoring the housing market, including any trends, housing reforms and announcements. If you would like to discuss how the above insights relate to your projects or investments, please get in touch with one of our experts.