Home starts highest in two decades but sharp downside clear: HIA

Building activity for home starts is at its highest in 20 years, but there’s an obvious downside, explains Housing Industry Association senior economist Shane Garrett.

Pointing to 2012 when activity was low, he said that breaking through the 180,000 starts mark by this time was beyond even the most optimistic of expectations.

However, there’s no avoiding the negatives.

“The multi-unit dwelling segment saw a sharp fall during the second quarter of this year, with detached house building also nudging down a little,” warns Garrett.

“On the renovations side, the volume of work done also fell, with a 3.0% reduction in activity during the June 2014 quarter.”

During the June 2014 quarter, new housing starts clocked in at 45,527 in seasonally adjusted terms. While this is a 6.9% drop on the previous quarter, the 2013/2014 starts totalled 180,833 – the highest 12 month total since March 1995.

During the June quarter, detached house commencements dropped by 1.1%, while multi-unit dwellings dropped by 15%, when considering seasonally adjusted figures.

With their recent estimates pointing to 186,000 new dwellings required each year until 2050, he notes that the figures are still short.

“Even in such a strong upturn, we are still short of this requirement today. This is a stark illustration of the serious supply-side issues which will need addressing,” he said.

June 2014 saw new home starts declining in most states. In the ACT, New South Wales and Victoria the drops were most pronounced with a 48%, 12.3% and 3.3% decline respectively. Queensland and South Australia fell modestly, by 1.3% and 1.7%.

Meanwhile, Tasmania, the Northern Territory and Western Australia saw an uptick by 28.7%, 18.3% and 2% respectively.