Private residential construction hits lowest level since late 1980s in Australia

Accountancy firm KPMG Australia said spending on new private residential construction was 14% lower than five years earlier, while spending on renovations was up 6.5%.

Renovation spending accounted for 40% of total construction spend in Australia in 2023-24, up from 34.2% in 2018-19, according to KPMG.

New private residential construction also includes one-for-one replacements where a detached home is demolished and replaced with a single new home. KPMG said its analysis showed 10% of new private residential construction spending was on one-for-one replacements.

For every nail hammered and brick laid in residential construction 40% of it is going into renovating a pre-existing home,” KPMG urban economist Terry Rawnsley said.

“This indicates that there is not enough money and resources being attracted to expanding the housing stock. More straightforward planning processes and lower risks for builders make renovating existing homes a favoured option over adding multiple homes on the same block.”