Value of new home building declines for fourth consecutive quarter in March: ABS

The new housing construction sector declined for the fourth straight quarter, according to March 2012 figures released by the ABS.

They show that for the March 2012 quarter, the value of new residential building work done fell 1.2% to $9.29 billion on a seasonally adjusted basis, following a 1.7% decline in the December 2011 quarter.

Over the past year to March new residential building work is down 8.7%.

Work done on new houses rose 0.2% to $6.14 billion while work done on new units fell 3.9% to $3.15 billion.

The value of alterations and additions to residential building fell by 5.5% over the quarter to be down 5.5% over the year to March.

“New residential building work done has now fallen for four consecutive quarters, while renovations work done has fallen for three consecutive quarters. Combined with leading indicators which show further weakness ahead, there is no doubt that the Australian home building industry is in recession,” says HIA senior economist Andrew Harvey. 

“As the residential building industry continues to contract, we are seeing real consequences for jobs, small business, the supply of new housing and rental costs. Governments can no longer ignore the negative impacts on employment, housing stress and Australia’s economy.” 

On a state-by-state basis when comparing the March 2012 quarter with the March 2011 quarter, the total seasonally adjusted value of residential work done fell by 14.8%in NSW, 0.8% in Victoria, 3.2% in Queensland, 8.5% in South Australia, 17.7% in Western Australia, 11% in Tasmania, and 2.8% in the ACT. 

In trend terms, the value of residential work done rose by 0.7% in the Northern Territory. 

Master Builders Australia was equally glum on the latest figures, with CEO Wilhelm Harnisch saying the statistics back up the findings of other surveys that show there is considerable uncertainty and reluctance amongst new home buyers.

“While today’s data is a look into the ‘rear mirror,’ forward housing indicators do not provide much optimism for a sustainable housing recovery taking place this year.

“The industry is anxiously awaiting the cumulative effect of four Reserve Bank rate cuts totalling 1.25% over recent months to kick in.

“The March ABS figures indicate the rate cuts from November and December 2011 haven’t had the effect they typically would have. The industry is relying on the effect from last year’s cuts, and the rate cuts in May and June this year begin to take hold.

“The March quarter statistics confirm the state of Australia’s two speed economy and the need for the Reserve Bank not to discount additional rate cuts,” he says. 

Non-residential building work slumped 4.1% in the quarter following a fall of 3.7% in the December 2011 quarter.

Overall, the seasonally adjusted estimate of the value of total building work done fell 2.8% to $18.7 billion in the March quarter, following a fall of 2.1% in the December 2011 quarter.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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