With last week’s release of Australia’s population data for the March quarter, it’s once again time to examine how Australia’s dwelling supply is tracking against population growth.
The below charts track the following, which are based on the latest available quarterly data:
- Dwelling approvals to June 2019;
- Dwelling commencements to March 2019;
- Dwelling completions to March 2019; and
- Population change to March 2019.
First, the national picture shows that dwelling approvals have collapsed with commencements following. Completions are about to peak, whereas population growth was strong at 388,800 in the year to March 2019:
Overall, dwelling construction is facing an epic bust with commencements / completions about to turn down hard. And this comes at the same time as population growth continues to run rampant.
Next is NSW, where after lifting to unprecedented levels approvals have collapsed, with commencements starting to follow. However, completions are peaking, whereas population growth remains strong:
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 slightly:
In QLD, dwelling approvals are also crashing, with commencements and completions still to follow. By contrast, population growth into QLD has risen strongly over recent quarters:
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 and commencements 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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