Residential building work up, but major renovations sluggish

The Australian Bureau of Statistic (ABS) Construction Work Done figures for the June quarter show that building work done rose 2.0% in the three months to June, with residential building work increasing 3.6% to a trend estimate value of $13.379 billion.

Construction work in Victoria, New South Wales and Tasmania has now risen in three consecutive quarters, while Queensland, Western Australia, the Northern Territory and South Australia all recorded declines in construction work for the quarter.

Work done in Queensland has fallen for two consecutive quarters. In South Australia, the Northern Territory and Western Australia, construction work has been decreasing for three quarters.

In the Australian Capital Territory, construction work done increased this quarter, after two years of declines in construction work.

With private new residential building work up 3.2% in the quarter, particularly driven by detached house construction, Housing Institute of Australia (HIA) economist Diwa Hopkins noted that major renovations work wasn't faring so well.

“A closer look at these preliminary results shows that the detached house segment was the key driver of growth in residential building during the June 2014 quarter, compared with the March quarter when multi-unit building led the charge," said Hopkins. Building work for new houses contributed 1.6 percentage points to the 2.2% increase in total residential building work done, according to HIA.

“These developments are largely in line with what we have been expecting of the current new home building cycle; that larger improvements in detached house building activity would follow in the wake of the previously strong growth experienced by the multi-unit segment of the market," explained Hopkins.  

“Unfortunately, conditions in the major-renovations segment of the market remained subdued, with the value of this work done declining by 2.4% during the June 2014 quarter.

“National accounts figures will reveal the full story on the renovations market, showing the value of both major and smaller jobs. Data from the March 2014 quarter was displaying tentative signs of
improvement and obviously we’d be hoping for this to continue in the June quarter, notwithstanding the less than auspicious results from today’s data release,” she concluded.