Any one seeking an answer as to why Australia’s real estate agencies, state governments, and housing construction industry are under pressure only needs to look at the below charts from RP Data, showing the marked slowdown in home sales and dwelling approvals relative to long-run averages.
The first chart shows that annual sales volumes have been trending downward since 2003 and were around-19% below the long-run average in the 12-months to March 2012:
According to RP Data:
Annual sales volumes peaked over the September 2003 quarter with 617,962 sales for the year. Ever since that time sales volumes have trended lower and as the previous chart shows, population growth has increased over that period. Over the period from March 1994 to March 2012 the Australian housing market has averaged 472,504 sales each year. This figure is -24% lower than the peak market activity however, it is -19.3% higher than the volume of sales over the 12 months to March 2012. Transaction volumes have been below the long-term average since September 2010.
It’s a similar story for dwelling approvals, which are tracking around -9% below long-run averages, according to RP Data:
Dwelling approvals peaked over the 12 months to September 1994 with 193,754 new homes approved for construction over the year. Over the 12 months to March 2012 144,594 new dwellings were approved for construction which was -25% lower than the historic peak but also -9.1% lower than the long-term average of 159,043 approvals each year.
As reported previously, the slump in housing activity is also reflected in the Australian Bureau of Statistics (ABS) housing finance data, which shows the number of housing finance commitments (excluding refinancings) tracking near decade lows, -16% below the five-year moving average:
Which helps to explain why the finance and insurance industries have been contracting relative to the rest of the economy after 20 years of strong gains:
