With the ABS yesterday releasing its population data for the March quarter, it’s an opportune time to once again examine how dwelling construction is tracking against population growth at the national and state and territory levels.
The below charts track the following, which are based on the latest available quarterly data:
- Dwelling approvals to June 2016;
- Dwelling commencements to March 2016;
- Dwelling completions to March 2016; and
- Population growth to March 2016.
First, the national picture shows that dwelling approvals have retraced but remain highly elevated, whereas commencements have rocketed as they play to catch-up. Completions retraced in the March quarter but should pick-up strongly as they catch-up with commencements. Population growth is also holding just above the GFC low and increased marginally in the latest quarter:
Next is New South Wales, where after a decade of sluggish construction, commencements have risen to record levels, although approvals appear to have topped-out (but are highly elevated). Completions also temporarily dipped in the March quarter, but will rocket over coming months. Population growth is also holding at an elevated level:
In Victoria, which has long been the construction leader, dwelling approvals have also peaked with dwelling commencements close behind. Like New South Wales, completions temporarily fell in the March quarter but should rocket from here. Population growth, however, has strengthened:
Queensland faces a big apartment glut. While dwelling approvals have begun to taper, commencements are still rising, suggesting a big pipeline of projects. Like the other major capitals, completions are lagging well behind but should rocket from here. By contrast, population growth has fallen significantly. Once completions converge with commencements and approvals, Queensland will likely have a huge glut:
Western Australia is also facing a big glut, despite the construction boom coming to an end. While approvals and commencements are well past their peak and are now falling, completions have only just begun to turn down, suggesting actual construction levels will remain elevated for several quarters to come. Meanwhile, population growth has crashed through the floor suggesting the supply-demand imbalance in Western Australia will only worsen from here:
While South Australia’s housing market is reasonably balanced at present, dwelling approvals have just picked-up as population growth has crashed. If maintained, it to could be aiming for a glut, although it’s too early to say for sure:
After a big increase in supply relative to population growth, the worm has turned for the Northern Territory. Supply has fallen back to earth just as population growth appears to have found a bottom. Still, dwelling additions continue to easily outnumber population additions, suggesting growing oversupply:
Finally, in the ACT, population growth is running just above the long-term average but so is dwelling construction:
The story is much the same from the last update.
Clear housing gluts appear to be developing across Queensland, Western Australia and the Northern Territory.
There’s an unprecedented amount of building going on in Victoria, although population growth is also very strong, partly mitigating any potential oversupply.
New South Wales’, like Victoria, is experiencing strong population growth but also a big lift in construction (off a lower base), meaning that Sydney’s much vaunted “housing shortage” is in the process of being eradicated.
