South Australia is withstanding the economic shock of COVID-19 better than almost every other state or territory, buoyed by our ‘mature and stable’ housing market.
This includes a recent surge in multi-unit construction, strong renovations activity, retail trade and wages growth, Australia’s leading housing industry body has found.
In its quarterly State Outlook (Winter 2020), the Housing Industry Association (HIA) also found strong non-first home buyer activity relative to other states, and improved net migration into SA further supported our overall economic resilience.
While the HIA forecasts an overall contraction in the total number of dwelling commencements across Australia this financial year due to COVID-19 (139,000 in 2020-21 down from 173,000 in 2019-20), there is expected to be only a ‘mild’ impact on detached dwelling starts in SA – down by 2.7 per cent.
Aside from Western Australia, it found SA “appears to be withstanding the economic shock better than other states”.
“South Australia has sailed through the shocks of the past 20 years with very little volatility and it looks set to do this again.
“It is not just that SA has held its ground as the credit squeeze pulled other markets downwards. It’s also that certain segments of SA’s housing market have strengthened in recent years.”
Treasurer Rob Lucas welcomed much of the independent report’s findings as a cause for cautious optimism, while recognising a forecast cooling in some construction segments, such as multi-unit dwellings.
“The SA housing and construction industry is an important local employer, supporting thousands of jobs – from carpenters, plumbers and bricklayers to electricians, architects and other suppliers,” said Mr Lucas.
“We are investing $2 billion in economic stimulus to support as many SA businesses and jobs as we can, while the Federal Government’s HomeBuilder scheme will provide a further shot in the arm for the construction industry, with more than 200 applications for the $25,000 grant in SA alone, so far.
“First new home buyers in South Australia will, therefore, now be eligible for up to $40,000 in grants towards their new home build (including the existing $15,000 State Government incentive) subject to meeting the eligibility criteria for each scheme.”
Other strong indicators that SA’s economy is showing resilience, include retail trade between February and June increasing by 10 per cent, compared with 7.2 per cent nationally (HIA State Outlook – Winter).
Recent wage and payroll data have also showed a shift in the right direction, with SA recording 2.4 per cent wages growth throughout the year to June, the country’s equal highest rate (ABS Wages Price Index).