New home building flat in June quarter: ABS

Conditions remained tough for residential home builders in the June quarter, according to the latest ABS data.

New house commencements fell 0.6%, to $5.63 billion, and new other residential building (apartments) rose 22.1% to $3.37 billion with total residential building work declining for the fifth consecutive quarter by 3.1% compared with the 2.5% decline originally reported in August.

Alterations and additions fell 3.9% to $1.64 billion.

Non-residential work commenced fell 22.1%, to $6.76 billion.

Of the major state housing markets, WA recorded the biggest decline in new residential building work done of 13.2% followed by South Australia (-5.7%), Victoria (-5%) and NSW (-3.4%).

The value of residential work done in Queensland rose 7.4% to $1.8 billion.

In aggregate, commencements of new residential buildings rose 6.8% to $9 billion while total new building starts (residential and non-residential) fell 7.5% to $17.4 billion following rise of 4.1% in March 2012.

A pick-up in new residential building activity in NSW and Queensland is anticipated following the doubling of state grants for first-home buyers buying a new property.

The Housing Industry Association (HIA) said the ABS figures show that  in mid 2012 residential construction activity was even weaker than first reported.

HIA chief economist, Harley Dale, said that a fifth consectutive decline in residential building work done in the June 2012 quarter was steeper than initially thought and confirmed an ten year low for new home building activity.

“Interest rate cuts are helpful in hopefully turning around residential construction from the parlous state evident in mid 2012. However, the efficacy of easier monetary policy is considerably diluted by the historically high and excessive margin between the official cash rate on the one hand and mortgage and business loan rates on the other,” said Harley Dale.

“Federal and state governments need to view today’s update on Australia’s residential construction industry as a signal they are failing to adequately invest in and reform new housing supply.

“Today’s update makes a mockery of recent scuttlebutt suggesting negative gearing arrangements need to be diluted or removed," says Dale.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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