According to new building activity data released by the Australian Bureau of Statistics (ABS), the pipeline of units under construction has reached a new record-high, with 152,449 units under construction nationally in the March 2016 quarter.
Unit construction commencements also saw record-highs, with 29,987 units commencing construction nationally over the quarter.
At a state level, unit commencements in NSW, Victoria and Queensland were at record highs, while commencements in South Australia and the ACT also rose.
Meanwhile, unit completions fell for the second successive quarter, with 15,002 units completed nationally. NSW and South Australia were the only states that did not experience a fall in unit completions.
Year-on-year, the number of units under construction has increased by 32.6 per cent.
According to CoreLogic research analyst Cameron Kusher, although completions have fallen, there are a record-high number of dwellings currently under construction that is being fuelled by units, which typically take longer to build than houses.
“There are currently record-high numbers of units under construction in NSW, Victoria and Queensland, which reiterates the magnitude of the current unit construction boom,” Mr Kusher said.
“In all states and territories except WA, Tasmania and NT, the number of units under construction has increased over the quarter.”
While the number of dwellings under construction is at a record high, CoreLogic’s analysis of ABS data suggests that an elevated number of houses and units have been approved for construction, but not yet commenced. At the end of March 2016 there were 8,817 houses and 24,175 units which had been approved for construction but not yet commenced.
“With completed and under construction supply ramping up sharply over recent years, it is reasonable to expect that fewer recently approved dwellings will actually commence in the short term,” Mr Kusher said.
“Particularly when you consider that high-rise unit construction is at record-high levels, and the considerable level of risk in constructing such a large project.
“The record-high number of dwellings under construction and the continuing strong pipeline of approvals should ensure that there is plenty of work for the construction industry over the coming years.”
Mr Kusher said there are concerns of ‘over-building’ in some areas, noting that much of the new unit supply is targeted at investors rather than owner-occupiers in certain locations.
“Given the challenges in securing enough pre-sales to trigger the commencement of some projects, over the coming quarters we’re expecting that some projects will not begin construction,” he said.