Mid-year drop in residential construction value
GUEST OBSERVER
The value of new residential construction work completed fell nationally by 3% in seasonal terms for the June 2015 quarter according to the latest ABS Construction Work Done release.
For the 12 months to June 30 however, the value of new residential construction work done had improved by 10.6% across the country largely due to more significant annual improvements in the value of residential work completed in New South Wales, Queensland, South Australia and Tasmania.
The figures underscore the important role residential construction work is playing right now in supporting the broader Australian economy.
The activity underway is still very strong, however the drop over the quarter posted by most states could be signs of a slowing in commencements.
This is something to watch as we can’t afford to see new construction levels weaken. Maintaining high activity is crucial to keep pace with housing demand, population growth and job creation.
States such as Queensland and South Australia posted declines in the value of work done in the June quarter of 10.2% and 16.2% respectively which needs to be monitored over the forward updates.
The value of residential construction work done in Queensland is the best it’s been since 2010, however the 2015 result still sits below the ten year annual average.
The ABS data shows good annualised levels of activity is flowing through the residential industry and the industry is in the midst of a strong patch but supply side efficiencies will be needed to support this activity long term.
Governments need to focus on supply side efficiencies in land release, improvements to development assessment and reform of inefficient taxes such as stamp duty to create prosperity, jobs and strong communities.
Nick Proud is residential executive director, Property Council of Australia and can be contacted here.