Residential construction has the second largest economic multiplier of all the 114 industries that make up the Australian economy, according to the first targeted report from the National Housing Finance and Investment Corporation’s (NHFIC) new research unit.
Nine jobs are supported across the economy for every $1 million spent on residential construction, the report, Building Jobs: How Residential Construction Drives the Economy, found.
Commenting on the research, NHFIC CEO Nathan Dal Bon said this meant that every new home built generated an average of three jobs throughout a range of industries, based on the average dwelling construction cost.
“Understanding how residential construction activity may affect jobs and flow through to the broader economy is increasingly important and timely, given the impact of COVID-19,” Mr Dal Bon said.
Building Jobs: How Residential Construction Drives the Economy is the first report from NHFIC’s new research arm since it was established this year by the Commonwealth Government. Its role is to undertake independent housing related research and to monitor housing demand, supply and affordability across Australia.
The Building Jobs report, which draws on the most recent available data from the 2017-18 Australian Bureau of Statistics (ABS) input-output tables released last month, found that $1 million of output in residential construction supports around $2.9 million of industry output and consumption across the broader economy.
The employment impact on construction services such as plumbing, electrical, bricklaying and carpentry is almost four times that of any other industry connected to the residential construction industry, the report found.
Around 134,000 people are directly employed in residential construction and the industry contributes about 5 per cent to annual Gross Domestic Product (GDP), making it a vitally important industry in the Australian economy in terms of its contribution to jobs and economic growth.
The report found that residential construction output supports more activity across the economy than nearly every other industry, due to its extensive and deep links with other industries.
“Based on our analysis using the latest ABS data, residential construction plays a vital role in supporting jobs both on and off building sites,” the Building Jobs report concludes.
Mr Dal Bon said NHFIC’s research agenda for 2020 would include a range of resources, with short targeted reports focusing on topical issues. In addition, NHFIC will produce a comprehensive State of the Nation report that will analyse Australian housing, including assessing potential gaps between housing supply and demand across major Australian cities and regional centres.
Read the Building Jobs: How Residential Construction Drives the Economy report.
For more information about NHFIC’s research agenda, visit the NHFIC website.