Real Estate construction experiencing significant contractions; HIA economist

The credit squeeze, and its impact on home building, weighed heavily on the Australian economy last year, according to HIA senior economist, Diwa Hopkins.

Figures from the ABS show that $65.35 billion worth of construction work was done on new Australian housing in 2019 - 8.5 per cent less than the record-setting heights of 2018.

“This home building contraction has just about run its course. Confidence returned to the overall housing market at the end 2019, buoyed by interest rate cuts and house prices returning to growth,” Hopkins said.

“The coming home building cycle is likely to be a fairly modest affair, with growth in home building forecast to be slow.”

“We estimate the industry commenced construction on 174,770 homes in 2019, and we are forecasting for activity to rise only marginally (by 0.6 per cent) in 2020.

“International factors may however impact on the volume of home building in Australia over the medium term,” she concluded.

Nationwide, the total value of construction work done on new housing in 2019 declined in New South Wales by 15.5 per cent, in Queensland by 10.1 per cent, in South Australia by 7.4 per cent, and in Western Australia 14.0 per cent.

Elsewhere the value of work done on new housing increased, with 0.1 per cent of growth in Victoria, 5.4 per cent in Tasmania, and 9.6 per cent in the Australian Capital Territory.