Yesterday’s dwelling construction data, released by the ABS, revealed a fall in actual completions over the December quarter, but a big pick-up dwelling commencements, which are following approvals upwards.
The below chart, presented below in rolling annual terms, summarises the situation well, with approvals and commencements finally beginning to catch-up to the recent strong population growth, with actual completions set to follow later this year:
What is most interesting about the current cyclical upswing in housing construction is the extent to which it is being driven by attached dwellings. As shown in the next chart, unit & apartment commencements hit a record high 19,928 in the December quarter (70,2011 in the calendar year), whereas detached house commencements remain depressed, running well below the 30-year average:
In fact, the the share of commencements taken up by units & apartments hit a record 42% in the 2013 calendar year, following a surge in construction since 2009 (see next chart).
Indeed, the state-by-state breakdown shows that the surge in apartment construction has been driven by the East Coast and the Northern territory, with shares in the other capitals remaining well below the other capitals (see next chart).
That said. when adjusted for population growth, the rate of unit & apartment construction is running only slightly above average, with detached house construction remaining well and truly in the gutter (see next chart).
This would suggest that the apartment boom could have much further to run.
