With yesterday’s release of dwelling commencements and completions data for the September 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 September 2019;
- Dwelling commencements to September 2019;
- Dwelling completions to September 2019; and
- Population change to June 2019.
First, the national picture shows that dwelling approvals and commencements are crashing hard with completions following behind. Whereas population growth has moderated slightly to 382,000 in the year to June 2019:
Overall, dwelling construction is facing an enormous bust at the same time as population growth remains strong.
Next is NSW, where after lifting to unprecedented levels, approvals are and commencements also crashing at an alarming rate with completions lagging. However, population growth remains historically strong, but has also faded:
It’s a similar story in VIC, where dwelling approvals and commencements are collapsing with completions lagging. By contrast, population growth remains turbo-charged and has only moderated slightly:
In QLD, the dwelling construction bust is further advanced. Approvals, commencements and completions are each collapsing, whereas population growth into QLD has risen strongly:
The construction cycle in WA continues to unwind abruptly with approvals, commencements and completions all collapsing. Meanwhile, population growth has rebounded after crashing recently; albeit remains at historically low levels:
SA’s housing market was headed into oversupply. However, the situation has changed with population growth accelerating just as dwelling construction indicators have fallen:
Heavy construction jobs losses are coming:
The quarterly jobs data from the ABS revealed that the number of Australians employed in construction hit a record high 1.2 million in November 2019, comprising 9.2% of the workforce:
Given the number of dwelling completions are way above approvals and commencements (see first chart), and that approvals and commencements have literally collapsed, this suggests that actual dwelling construction activity will continue falling through 2020, thus continuing last year’s trend:
Indeed, as shown in the next chart from UBS, construction job ads have declined by around 30% – commensurate with the decline in dwelling approvals – resulting in a “material drop in construction employment ahead”:
Adding to the pain, infrastructure investment is also projected to decline in 2020 as the National Broadband Network (NBN) rolls-off:
Until now, construction jobs have defied gravity. Soon they will come crashing back down to earth.
