NSW drives dwelling construction bounce

By Leith van Onselen

The ABS has just released dwelling commencement data for the June quarter, which registered a 4.6% (1,497) increase in the number of dwellings that commenced construction over the quarter.

Below is a time series chart showing the split at the national level:

The construction of units & apartments drove the lift, increasing by 18% (2,022) over the quarter. By contrast, the construction of houses fell by -2% (-464) over the same period.

New South Wales, which has for a long-time dragged down construction nationally, drove the increase, with commencements increasing there by 25.9% (1,494) over the quarter. Queensland, which has also experienced sluggish construction of late, also recorded a solid 8.1% (516) increase in commencements.

Overall, it’s an encouraging result, which will hopefully build over the coming year following the New South Wales and Queensland Government’s changes to the first home owners grant.

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

Leith van Onselen

Comments

  1. Yes – there is quite a lot of residential construction activity round Parramatta at the moment even though the market for existing dwellings is giving me flash backs (where I have I seen that bizarre leopard print lounge room setting before? – Hmm about 12 months ago)

  2. “The number of private sector houses started by builders has fallen for the 10th quarter in a row as the contraction in the industry leaves builders scrambling to find work.” AFR seem to see thing s little differently

    • The Economist first started calling for a burst in the Australian Property Price bubble sometime around 2002. It will be right sometime, but I’m not holding my breath in anticipation.

      • Yes, isn’t “timing” a bummer? I think the histories of house price bubbles around the world will have to have a special chapter on Australia. I have suspicions about what is keeping it inflated for so long; I suspect covert central bank QE into the mortgage market.

        So whatever happens, it will be different to California and Ireland and Spain, where the crash was unanticipated in monetary policy. I argue that you cannot sustain the distortions in the economy, that result from inflated urban land costs, indefinitely. Not even if the central bank has a cash pipe hooked up directly to the mortgage counters at the banks.

        • Phil, I don’t think there was anything covert about propping up the banks with RMBS purchases after the GFC hit, or the FHOG boost, or the various state level grants, a complicit media, and representatives of institutions such as the RBA going out of their way to deny there was either a bubble or affordability problem. It’s all been hidden in plain sight.

  3. It has been happening already….. unless one trusts what the real estate industry spruiks in partnership with Fairfax…… I know Willamstown and Newport area quite well, even the most optimistic accept stagnation now, but this was challenged by a 2010 buyer whose real estate contacts informed him (like someone else has here) that it is in range of – 10-25%….. with less credit, negligible population growth, retiring baby boomers, job insecurity etc.

    Regional areas possibly worse……