Residential construction activity going from strength to strength

Residential construction activity going from strength to strength
Zoe FieldingDecember 7, 2020

Residential construction activity is expected to remain strong in the coming year following a considerable rise in new housing starts in the year to March 2014.

The value of new housing starts rose by 8.7% in seasonally adjusted terms in the March quarter compared with the previous three months, the Australian Bureau of Statistics reported. Compared with the March quarter of 2013, new housing starts were up by 22%, the ABS reported.

Housing Industry Association chief economist Harley Dale said the increase included a 12.8% surge in detached houses.

“The annual level of new dwelling commencements is at its highest since late 2010 and at 176,891 is approaching historical peaks, with further upward momentum to come,” Dale said.

Dwelling commencements increased in all of the states and territories, except South Australia, where housing starts fell by 7.8%.

The strongest increase was in the Australian Capital Territory (31.6%), followed by Victoria (15.4%), Western Australia (12.1%), the Northern Territory (5.9%), Tasmania (5.3%), New South Wales (2.5%) and Queensland (1.3%).

The value of residential building work done in the March quarter also rose, the ABS reported.

Residential building work done in the March quarter was up 7.6% compared with December quarter and up 8.5% compared with the previous March quarter, the ABS reported.

Forward sentiment indicators for the residential construction sector are also strong with the latest Property Council-ANZ Property Survey finding construction businesses expect strong activity in major metropolitan centres to continue over the next year.

Overall, expectations for the September quarter moderated, the Property Council-ANZ Survey found. That was in line with a decline in home building approvals data reported by the ABS.

The property sector remained optimistic about the outlook for the coming year, although construction activity expectations peaked in the June quarter, the Property Council-ANZ survey showed.

ANZ chief economist Warren Hogan said the industry’s optimism was driven by strong underlying housing market demand, a solid pipeline of building activity and expectations of further cyclical improvement in economic conditions.

The residential sector was still the strongest part of the industry with construction activity and price expectations buoyant even though price expectations had softened in line with lower auction clearances, he said.

“House prices now appear to be settling down to more sustainable growth rates. House prices are expected to rise over the next 12 months in every State except the ACT,” Hogan said.

Zoe Fielding

I am a freelance journalist and editor with more than 15 years experience specialising in personal finance, property, financial services and financial technology. A skilled writer and researcher, I have extensive experience producing high quality content for corporate and media clients. I am used to working to tight deadlines and tailoring the pieces I produce to suit a variety of audiences and formats.

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