In its latest outlook report, the Housing Industry Association says since the end of the federal government's HomeBuilder scheme in March, new home sales have been the strongest since 2017 with construction commencing on over 115,000 detached homes.

"This strong level of home building activity suggests that the current boom in residential construction will be sustained throughout 2022," HIA chief economist Tim Reardon said.

However, he warned the full impact of the loss of migration is yet to fully impact demand for detached housing and expects a future rise in interest rates will mark the end of this COVID building boom.

In the meantime, the impact of the coronavirus pandemic has seen a clear shift towards lower density housing and this trend is showing no signs of slowing.

"This shift is not just those in units moving to detached housing but includes a shift to fewer people per household," Mr Reardon said.

"As a result, we have seen a significant change in the volume, type and location of new homes. These trends are similar in other countries."

However, it is anticipated that the COVID pandemic will see fewer homes built in Sydney and Melbourne over the decade than previously expected, although all other regions benefit from this shift in location of housing.

The industry does face constraints in land availability, labour and materials.

Over the year to September, the cost of skilled trades increased by 5.2 per cent, while the price of materials increased by eight per cent.

At the same time, the price of residential land increased by 8.5 per cent in the 2020/21 financial year.

"This has led to an increase in the cost of a new house and land package," Mr Reardon said.

"These cost increases have not led to constraints on access to finance, as the cost of an established home has increased significantly faster."

Australian Associated Press