Yesterday’s housing finance data for February, released by the Australian Bureau of Statistics (ABS), contained some good news for the construction industry, with the number of finance commitments for new dwellings and construction increasing by a seasonally-adjusted 1.2% over the month and by 13.5% higher over the year, and is now tracking above the 5-year moving average (5YMA):
The recovery is even more obvious when the data is plotted on a rolling annual basis, which shows a clear acceleration of commitments over the past year (see next chart).
The recovery in finance commitments for new dwellings and construction is being driven primarily by big gains in Western Australia, although Victoria and New South Wales have also been experiencing increases recently (see next chart). Note, rolling annual figures have been used as the state-based data is not seasonally-adjusted, therefore, monthly comparisons are affected heavily by seasonality, which makes comparisons problematic.
The above surge in Western Australian finance commitments is also broadly reflected in dwelling approvals and new house sales data, which have shown a strong uplift in activity over the past 6 to 18 months (see next chart).
On the other hand, the October 2012 changes to first home buyer (FHB) incentives in New South Wales and Queensland aimed at boosting new home construction appear to be having only mixed success. While New South Wales has registered a solid pick-up in finance commitments for new dwellings and construction since the changes were implemented (see above), data on new house sales and approvals has been less convincing (see next chart).
Data for Queensland has been even worse, with FHB commitments (see above), as well as new house sales and approvals, all experiencing falls since the FHB Grant was modified in October 2012 (see next chart).
Overall, the ABS data seems to confirm that the housing construction industry is experiencing only a modest recovery.
