CoreLogic’s Cameron Kusher has released a research note looking at dwelling commencement trends across Australia’s various sub-components, which shows that risks are skewed towards high-rise construction:
The Australian Bureau of Statistics (ABS) recently released the quarterly Building Activity data for December 2018. The release is a treasure-trove of data and includes information on dwelling commencements, dwelling completions, dwellings under construction and dwellings approved for construction but not commenced. This release has published very valuable data on the number of units commenced by the number of storeys…
The most notable change in the landscape of dwelling commencements over recent years has been the lift in apartment starts and more recently their fall. The increase in higher density construction has primarily been driven by the three most populous states, or more specifically, the capital cities of each of those states. Over the past five years, every state and territory has seen unit commencements reach historic high levels, demonstrating a clear shift towards higher density development (that isn’t to say that detached housing construction hasn’t also climbed significantly over the period). More recently, as the housing market has turned and values have started to fall we can see there is a reduced preparedness of developers to commence new projects. We would expect that commencements, particularly for units, are likely to continue to trend lower over the coming quarters as housing values continue to record value falls, finance remains tight, and both domestic and foreign investors remain light on the ground.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
