Dwelling commencements continue slide

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ABS released their Dwelling Unit Commencement figures today for the September quarter – down 3.3% over the quarter, and for some long-term perspective, down 17% since the peak rate of dwelling construction in September 2002. This follows significant upward revisions to the June quarter figures.

This measure estimates the number of new residential dwellings that began construction (physical site works) during the period.

The results were apparently a surprise to many economics, with expectations of a 2% boost over the quarter. I can’t understand exactly how such a boost was to eventuate. With low residential property transaction volumes in all States, and a glut of existing stock on market, developers with approved sites are finding it close to impossible to meet the necessary pre-sales to begin construction. While residential turnover remains low (or falling), don’t expect to see an uptick in this falling trend.

Private sector dwellings were down 2.9% over the quarter (1,004 dwellings), and public sector dwellings were up 8.7% (96 dwellings).

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The chart below shows private sector residential construction continuing to fall from its recent peak in December 2010.

By State we can see the significant slow down in the construction cycle continuing across the country, and the impressive Victorian construction boom coming to an end.

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Finally, the public sector is continuing to have a heightened level of involvement in residential construction, but is far down from the 2009-10 stimulus period.

Be prepared for these figures to be used to support the property lobby’s arguments that a massive housing shortage is imminent.

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