Earlier this week I provided 13 charts plotting annual population change (current to December 2018) against annual net dwelling additions nationally and across each of the major markets (to March 2019). This data showed that housing is well supplied nationally, albeit it is beginning to tighten as population growth increases and construction rates fall.
Below are six more charts plotting Australia’s dwelling construction against population growth, namely:
- Dwelling approvals to March 2019;
- Dwelling commencements to December 2018;
- Dwelling completions to December 2018; and
- Population change to December 2018.
First, the national picture shows that dwelling approvals have collapsed with commencements following. Completions are about to peak, whereas population growth rose to 405,000 in the 2018 calendar year:
Overall, dwelling construction is facing an epic bust with commencements / completions about to turn down hard.
Next is NSW, where after lifting to unprecedented levels approvals have collapsed, with commencements starting to follow. However, completions are peaking, whereas population growth has risen once more:
In VIC, both dwelling approvals are also crashing, with commencements starting to follow. Completions also fell but will probably pick-up in the short-term as they follow the latest commencements peak. Population growth is still turbo-charged, albeit has moderated:
In QLD, dwelling approvals are also crashing, with commencements and completions still to follow. By contrast, population growth into QLD continued to rise in the December quarter:
The construction cycle in WA continues to unwind abruptly with approvals, commencements and completions all plummeting. Meanwhile, population growth has rebounded after crashing recently; albeit remains at very low levels:
SA’s housing market was headed into oversupply, although the situation could be changing with population growth accelerating just as dwelling approvals and commencements are retracing:
To summarise, while the housing market has hit oversupply as the plethora of homes are completed, the collapse in dwelling approvals suggests that construction will bust later this year and into 2020. This will likely lead to heavy construction job losses, as well as tightening rental vacancies into 2020.
Other things equal, this points to higher rents in the future; although this will also depend on what happens to wage growth and unemployment.
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