Despite pick-up, housing construction remains in the doldrums

By Leith van Onselen

New home sales and dwelling approvals data released this week has been hailed by some commentators as signs that Australian housing construction has finally turned the corner after experiencing recessionary type conditions over the past few years.

While the uptick in both sales and approvals over the past few months is welcome news, it is far too early in my view to proclaim that a housing recovery is underway.

First, on a rolling annual basis, the total number of dwelling approvals remains depressed, tracking some -4% below the 30-year average despite Australia’s population having risen by over 45% over this period (see below chart).

More worryingly, despite this month’s uptick, rolling annual new home sales hit fresh all-time (16-year) lows in November, with the detached house market hit especially hard (see below chart).

When detached house approvals are compared against detached new house sales, there appears to be a supply glut building on Australia’s outer suburban housing estates, with new house sales falling at a much faster rate than approvals (see below chart).

Until there is a sustained pick-up in new home sales and approvals, it is premature to suggest that a housing construction recovery is underway.


  1. Housing market must be getting bad if the Singapore government is pulling its money out of Australand.

  2. Melbourne’s supply will reach nosebleed levels, if it hasnt already.

    Alot of builders getting nervous and starting to be alot nicer to deal with now that they realise that they are not in the divers seat.

  3. Q.Why aren’t the developers building more?
    A.Because they are selling less.

    Q.Why are they selling less despite record low IR and govt incentives?
    A.Because their prices are too high.

    Mr Peet has realised this and is discounting heavily. Mr Australand has realised this and is looking to get out. Mr Stockland and Mr Mirvac still believe the price-fixing cartel is still solid are trying to keep the old scam going.

    There is a widespread reset of res land prices occuring. That will reset new dwelling prices. That will reset existing dwelling prices.

  4. You know when you invert that last figure of UE’s, the ‘house sales’ line starts to look an awful lot like the Greek and Spanish unemployment rates at the moment…

    Is early 2013 going to be the Minsky moment all the bears have been calling for since 2008? Will we see a rush for the exits and a major increase in stock for sale on the Aussie market from their already very high levels?

    I do believe the herd is getting a little restless and wide-eyed. Stand clear.