The new housing sector in Australia is remaining weak with the latest figures from the Australian Bureau of Statistics showing that building work fell towards the end of last year.
Leading housing indicators looked very weak in late 2011, but ahead of this period actual residential construction activity had already been trending down for 12 months,’ said Harley Dale, chief economist of the Housing Industry Association, the voice of Australia’s residential building industry.
‘A three pronged attack is required to resurrect activity in residential building, an industry which has a large multiplier impact in terms of output and employment across the wider domestic economy,’ he explained.
‘There is an urgent need for further cuts in borrowing costs for both businesses and mortgage holders, short term government stimulus, and renewed action on the longer term housing policy reform front,’ he added.
New residential building work done fell by 1.9% in the September 2011 quarter reflecting a 2.6% decline in detached housing and slight fall of 0.3% for others.
Meanwhile, the value of major alterations and additions work done, which accounts for around 20% of total renovations activity, eased by 0.2%.
In the September 2011 quarter, seasonally adjusted residential building work done fell by 17.9% in South Australia, by 7.9% in Western Australia, by 8.9% in Tasmania, and by 6.5% in the Australian Capital Territory.
Residential building work done increased by 1.1% in New South Wales, by 4.4% in Victoria, and by 0.9% in Queensland.
In original terms residential building work done in the Northern Territory in the September 2011 quarter was down by 15.5% when compared to the September 2010 quarter.
Dale also pointed out that the combined number of loans for construction/purchase of a new dwelling was effectively flat in November 2011, up just 0.3% and is down by 8% when compared to the same month in 2010.
Over the three months to November 2011 the total number of first home buyer loans was 19% higher when compared to the same period in 2010, while loans for trade up buyers rose by 2.4%.
The seasonally adjusted number of loans for new housing, that is construction and purchase of new homes, increased by 5.6% in New South Wales, by 8.4% in Queensland, by 13.4% in South Australia, by 20.9% in the Northern Territory and by 17.5% in the Australian Capital Territory.
The number of loans for new housing fell by 8.5% in Victoria, was down by 3.3% in Western Australia and by 8.9% in Tasmania. Over the three months to November 2011 lending for new housing was down in all states and territories except for Tasmania, Western Australia and Queensland.
‘The second half of 2011 saw a renewed trend decline in new home lending, a concerning situation which further highlights the risk of new housing starts approaching GFC-like levels once more,’ explained Dale.
‘The continuing recovery in the aggregate number of loans for first time buyers, and to a lesser extent trade up buyers, is encouraging and is being driven by the established market.
‘However, a sustained recovery in new housing, including investment in new rental stock, won’t occur without the combination of interest rate cuts, short term government stimulus, and longer term policy reform,’ he added.