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Building activity continues to shrink

The number of new dwellings commenced and completed tightened over the June quarter, while the value of total building work done also fell, according to new ABS data.

The Australian Bureau of Statistics’ latest Building Activity data for the June quarter revealed that completion of new homes (seasonally adjusted) fell by 0.9 per cent over the June quarter.

Moreover, completions were down by 9.6 per cent compared with the June quarter last year.

Unit completions declined by 2.9 per cent over the quarter and were lower by 13.9 per cent over the year.

The number of house completions were down by 0.5 per cent over the June quarter and fell by 5.9 per cent compared with the June quarter last year.


Commenting on the data, property intelligence platform Archistar chief economist Dr Andrew Wilson said that while the number of new dwellings continues to decline, the significant drop in migration would likely offset any potential future significant housing shortages.

“The number of dwelling completions is set to continue to fall, driven down particularly by the collapse in new unit construction over recent years,” Dr Wilson said.

“The spectre of housing shortages as a consequence of sharply reduced residential construction is, however, now likely to be offset by the prospect of a dramatic fall in migration as a consequence of ongoing coronavirus policy border restrictions.”

However, Dr Wilson said he did not foresee significant impact on house prices stemming from the volatility in housing supply.

“The likely rebalancing of the underlying housing supply-demand mix is unlikely to have significant consequences for home prices generally, particularly in the shorter term, with buyer activity increasingly supported by direct government policies and the continuance of record-low interest rates,” he said.

The data also revealed that the seasonally adjusted estimate for the total number of dwelling units commenced fell by 5.6 per cent over the quarter.

This fall was driven by private sector other residential dwellings, which fell 14.1 per cent to 15,966 dwellings in the June quarter, following a rise of 8.2 per cent in the March quarter.

Private sector house commencements fell 0.8 per cent to 25,397 dwellings in the June quarter following a rise of 2.6 per cent in the March quarter.

The value of total building work done fell 3.8 per cent in the June 2020 quarter in seasonally adjusted terms.

According to the ABS, this decline was driven by new residential building work done, which fell 4.9 per cent to $14.6 billion.

Work done on new houses fell 4.7 per cent while new other residential building fell 5.1 per cent.

Meanwhile, non-residential building work done also fell 2.1 per cent in the June quarter, after rising 2.8 per cent in the March quarter.

Recent ABS data on building approvals showed that for the month of August, there was a 1.6 per cent drop in total dwellings approved on the previous month in seasonally adjusted terms.

However, the value of total buildings approved rose 18.1 per cent in August in seasonally adjusted terms, with non-residential building rising by 40.7 per cent.

[Related: Building activity waned ahead of COVID drag]

Building activity continues to shrink
Building activity continues to shrink

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