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Building activity waned ahead of COVID drag

Residential building activity contracted over the March quarter, prior to the introduction of lockdown measures imposed to curb the spread of COVID-19, new ABS data has revealed.

According to the Australian Bureau of Statistics’ (ABS) latest Building Activity data, the value of new residential building activity fell by 1 per cent (seasonally adjusted terms) over three months to 31 March 2020 to $15.2 billion.

When compared with the March quarter of 2019, the value of new residential building activity slipped 12.8 per cent.

This preceded lockdown measures introduced by federal and state governments aimed at curbing the spread of COVID-19.

Housing market sentiment has since shifted further to the downside, with analysts expecting prolonged weakness off the back of a sharp COVID-induced spike in unemployment.


The COVID drag is reflected in the ABS’ Building Approvals data for the month of May, which reported a 16.4 per cent (seasonally adjusted) slide in housing approvals.

A 34.9 per cent plunge in unit approvals drove the decline, with house approvals down just 4.4 per cent.

“The decline in approvals in May is only the start of the COVID-19 shock in home building,” Housing Industry Association (HIA) economist Angela Lillicrap said.

“We anticipate building approvals data will continue to decline for a number of months, due to the lag in the approvals process.

“The economic uncertainty in the months prior to May are a significant factor leading to the decline in approvals in May.”

In response to the hit to confidence in the residential property market, the federal government rolled out its HomeBuilder scheme in June to breathe life into the sector.

The HomeBuilder scheme provides eligible owner-occupiers “substantially renovating” or building a new home from 4 June to 31 December 2020 with a $25,000 grant.

The government has estimated that approximately 27,000 grants would be handed out as part of the package across $10 billion in building projects, supporting 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector. 

“HomeBuilder and an easing of restrictions should assist in bringing consumers who delayed their purchasing decisions back to the market and minimise the adverse impact of the COVID-19 shock on employment in the sector, but this will not be reflected in ABS data for some months,” Ms Lillicrap added.

[Related: HomeBuilder sparks surge in home sales]

Building activity waned ahead of COVID drag
Building activity waned

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