"We will go at higher levels for a number of years," says Robert Lynch, the chairman of listed home builder Tamawood and former Investa Property Group residential head. "If you go back 15 years, the drop-off we used to get to was 100,000 to 115,000. The bottom we get to is going to be a lot higher than it used to be."

The question for developers and builders alike, however, is how high and how long this housing boom will go.

Last year detached house starts jumped more than 17 per cent to 112,245 from 95,547 in 2013. It's a large gain, but in historical terms less notable. For the past 45 years in fact, construction of detached houses has been remarkably constant, averaging 103,654 starts each year, even taking into account the decade NSW lost by failing to release more land for housing.

More apartments

The growth that is changing the housing construction market is coming primarily from apartments, as well as other denser types such as townhouses and semi-detached homes. While commencements of these have averaged 42,953 for the past 45 years, last year they were nearly double that, at 83,987.

In a further contrast with the past, the boom is being lengthened because the gap between approvals and commencements of apartments - which can take up to two years to get going after getting the green light - means production rolls out more slowly.

Credit Suisse analyst Andrew Peros says the historical average length of a housing boom is 2.3 years from trough to peak of approvals. The current one is not yet even two years old and has further to run, he says.

"Based on the pipeline of approvals which are yet to commence, it's clear this cycle will surpass the average length of previous cycles," Peros says.


How long the boom continues depends in part on the willingness and capacity of local authorities to keep approving new apartments. In the short term, it is likely to remain strong. The latest Ai Group/Australian Contractors Association Construction Outlook report predicts the growth in the value of multi-level apartments to more than double to 14.9 per cent this year – from 7.1 per cent – before moderating to 4.1 per cent next year.

The current boom may give little more than a temporary lift. The unprecedented demand is drawing more production of houses, even without state and local governments having to tackle the blockages in timing and planning that are holding up supply, BIS Shrapnel's Hawtrey says.

Supply decisions delayed

"One irony of this housing boom is that it's going to mean that policymakers simply defer any real action on the supply side," he says. "We're getting enough supply, but that's because of cyclical reasons and possibly one of the tragedies, or ironies, of this upswing is that it camouflages for a certain period the structural barriers that still exist on the supply side."

But even if this is the case, the unstoppable Sydney market is likely to keep going. Those unresolved structural constraints will limit the roll-out of new usable land, but will ironically keep activity at its current buoyant level at least for the next two years and "maybe a long time after that", Lynch says.

At the same time, the regional disparities in the housing economy have been laid bare and that, he says, will be the pattern of housing construction in Australia for the foreseeable future.

"Sydney won't drop off," Lynch says. "Melbourne is going to tick along as it is. Brisbane is not at such a high level at all. There is a bit more growth in the Brisbane market, but WA is going to drop off a fair bit."