Construction on new homes has slumped to its lowest level in a decade, prompting fresh calls from Australia’s housing industry for governments to do more to support the sector. Residential construction fell 1.9% in the June quarter, in seasonally adjusted terms, to its weakest level since 2002, according to the Australian Bureau of Statistics. Sources: Timberbiz, AAP
New residential building work fell by 2.5% compared with the previous quarter while alterations and additions, including home renovations, were down 2.3%.
The Housing Industry Association (HIA) said help from state and federal governments was called for.
HIA chief economist Harley Dale said the sector was faring worse now than at the depth of the global financial crisis.
“That situation is unhealthy and undesirable for Australian businesses and households, while federal and state governments are too slow in taking action,” he said.
But National Australia Bank senior economist Spiros Papadopoulos said the result was unsurprising. He expected it to take another six months before recent interest rate cuts by the Reserve Bank of Australia (RBA) began flowing through to the housing sector.
The cash rate is sitting at 3.5% following the RBA’s decision to cut it by half a point in May and a quarter point in June.
“Given the lag involved in actually getting the building work done, post the approval process, we still think we are a quarter or two away from getting a positive reading coming through on the residential side,” Papadopoulos said.
The ABS data also showed a 1.2% decline in non-residential building over the quarter. Engineering construction, which includes the mining sector, fared better with the total value of work done rising 0.9%.
JPMorgan said engineering work, which makes up 63% of the total value of construction work, was the bright spot of the figures, noting that the growth was mostly generated by the public sector.
However, the rate of growth in that sector was substantially lower than the 15.1% increase recorded in the March quarter.
Overall, the total value of construction slipped 0.2% in the quarter, well below economists’ forecasts of a 1.9% rise.
