The Australian Bureau of Statistics (ABS) has just released building activity data for the September quarter, the highlight of which is the fall in the total number of dwellings completed on the back of a big fall in apartment building.
According to the ABS, the total number of dwellings completed over the quarter fell by a seasonally-adjusted 526 units (-1.4%), with apartment building falling by -1,041 (-7.2%), partly offset by a 515 (+2.3%) increase in detached house construction:
Despite this quarter’s small fall, dwelling completions are running well above the March quarter’s levels, whereby dwelling completions fell to decade lows. Nevertheless, dwelling construction remains depressed, with the total annual number of homes constructed still tracking below the 28-year average despite Australia’s population growing by around 40% over that time:
The number of dwellings constructed fell in all mainland states and territories in the September quarter, except New South Wales and Western Australia:
We know from the latest dwelling approvals data that the number of dwelling approvals has picked-up in recent months, but remains fairly depressed overall, signalling only a weak recovery in the rate of dwelling construction:
The construction industry will be pinning its hopes on further interest rates cuts and new home incentives recently introduced in New South Wales, Queensland and South Australia. If these changes fail to reinvigorate new home sales and construction, the construction industry could be staring down the barrel of further cutbacks and job losses.
You’ve got to hand it to the Vics, they sure love building houses.
“You’ve got to hand it to the Vics, they sure love building houses.”
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Twirling, twirling, twirling towards freedom!
Melbourne property investor types (particularly apartments) = Balls of Steel
Will be interesting to see just how resilient those ‘balls of steel’ are given the the massive kick they are due to receive!
Go Victoria! Good luck with selling all those houses into a saturated market.
The lack of a population deflator makes your first graph appear trendless. 148,000 completions in 1985 is vastly different to the same number in 2012.
And despite the alleged popularity of hi-rise flats, I wouldn’t touch one. The horror stories of thin walls and staggering body corp expenses are a major deterrent.
Don’t Buy Now!
Numerous apartment buildings still being worked on as well as other projects in the pipeline! Continuing to bloat the stock on market!
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A friend of mine who is due to take possession of his apartment later this year will be in for a rude awakening me thinks.
The weird thing is Melbourne SOM fell by 10% MOM in Dec.
Do they count new dwellings?
So re Mel/Vic
- Vic new dwelling construction close to all time highs:(~50k pa)
- Vic new dwelling sales at record lows(~20k pa)
- Melbourne SOM down 10% MOM
Where is all the unsold stock? Country Vic?
I worked on master-plans for several residential estates planned for the Western Suburbs!
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Last time I checked they were still geared to go!
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Here in the eastern burbs you could throw a dart with your eyes closed and hit a development either newly completed or under construction.
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I wish we had stats on prestige second hand cars for sale, I have a feeling there will be a boom in the numbers there.
The vast majority of completed dwellings are pre-sold off the plan so there is no need for developers to sell them into a saturated market (because someone already owns them).
Overseas investors (mostly wealthy Chinese) have bought many of the apartments in VIC and are keeping them vacant. They typically don’t make them available for rent because they are not an investment.
Many of the apartments are used as temporary accomodation by their owners or their family when travelling to Australia for business or pleasure. They are also purchased for eventual use as leverage to get residency in Australia (which is easier if you’re wealthy and already own Australian residential property).
If you’re looking for a property crash in VIC, look to the outer western and outer south-eastern suburbs. Plenty of poorly constructed McMansions a million miles from any decent infrastructure / employment / culture.
AND, I agree, DON’T BUY NOW!
I have seen alot of apartments at or near completion with many still for sale.
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Many purchased off the plan hoping to flip for a profit once it was built, a birdy told me agents were doing this regularly.
“Many purchased off the plan hoping to flip for a profit”… good luck. DON’T BUY NOW!!!
However, if you want proof of my comment above about Chinese purchasers, see MB post “Rental vacancies surge on seasonality” http://www.macrobusiness.com.au/2013/01/rental-vacancies-surge-on-seasonality/
A massive number of dwellings (mostly apartments) have been completed in VIC in the twelve months to December 2012 and at the same time, the vacancy rate FELL (from approximately 16,000 to 15,500 vacant dwellings).