Following on from yesterday’s ABS release of dwelling commencements and completions for the March quarter, it’s time once again to plot Australia’s various measures of dwelling construction against population growth, namely:
- Dwelling approvals to March 2019;
- Dwelling commencements to March 2019;
- Dwelling completions to March 2019; and
- Population change to December 2018.
First, the national picture shows that dwelling approvals and commencements have both collapsed, whereas completions are yet to follow. By contrast, population growth rose to 405,000 in the 2018 calendar year:
Clearly, based on this data, dwelling construction nationally is facing an epic bust.
Next is NSW, where after lifting to unprecedented levels approvals have collapsed with commencements following closely behind. Completions have just peaked, whereas population growth has risen once more:
In VIC, both dwelling approvals and commencements are also crashing, whereas completions are still to peak. Population growth remains turbo-charged, albeit has moderated:
In QLD, dwelling approvals and commencements are crashing, with completions lagging behind. By contrast, population growth into QLD continued to rise in the December quarter:
After experiencing a crash for the ages, there are tentative signs that WA’s construction cycle is turning. While commencements and completions continued to fall in the March quarter, approvals registered a small rebound. Population growth has also 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 falling:
To summarise, while the housing market recently hit oversupply following the plethora dwelling completions, the collapse in both dwelling approvals and commencements suggests that an major bust is on the cards that will likely continue through 2020. This should lead to heavy job losses, as well as tightening rental vacancies into 2020, given population growth is accelerating.
Other things equal, this points to higher rents down the road; although this will also depend on what happens to wage growth and unemployment, since one cannot leverage rents.