Powered by MOMENTUM MEDIA
subscribe to our newsletter

Residential construction activity wanes

Construction activity has decreased beyond expectations, partly driven by a slump in the residential space.

The Australian Bureau of Statistics (ABS) has released its latest Construction Work data for the three months to 31 December 2019, reporting a 3 per cent decline in overall construction activity (seasonally adjusted terms) – beyond market expectations (1 per cent).

The value of total construction work slipped to $49.7 billion, down 7.4 per cent in annual terms.

The overall decline was partly driven by a 4.6 per cent slide in residential construction work over the December quarter to $17.4 billion.

In annual terms, residential construction activity is down 12.8 per cent. 

Advertisement
Advertisement

This comes as new figures from the Housing Industry Association’s (HIA) National and State Outlooks have shown that the number of homes constructed in Australia fell from 225,061 in 2018 to just 174,770 in 2019 – the lowest level experienced by the industry since before the introduction of the goods and services tax for new homes.

According to the HIA, this slowdown in home building may be a significant contributor to the stalling national economy.

However, reflecting on the ABS data, HIA senior economist Diwa Hopkins claimed that the downturn in construction activity has “run its course”, pointing to the recent recovery in demand for housing.

“Confidence returned to the overall housing market at the end 2019, buoyed by interest rate cuts and house prices returning to growth,” Ms Hopkins said.

“We expect the improved conditions will flow through to the new home-building side of the market this year.”

PROMOTED CONTENT


However, Ms Hopkins noted that the next few cycles are likely to be “a fairly modest affair”.

“We estimate the industry commenced construction on 174,770 homes in 2019, and we are forecasting for activity to rise only marginally (by 0.6 per cent) in 2020,” she added.

“International factors may, however, impact on the volume of home building in Australia over the medium term.”

[Related: Home-building levels shrank drastically in 2019]

Residential construction activity wanes
Residential construction activity wanes
mortgagebusiness

Latest News

The RBA has cautioned lenders and the financial sector against “excessive risk-taking” amid rising asset prices, including looser lendin...

First home buyer loans hit its second highest level in over a decade in February, but levels are expecting to drop as house prices continue ...

A not-for-profit organisation has announced a new grant funding round for social and affordable housing projects in the Northern Territory a...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Tackling the home deposit challenge

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.