Australian house building hits 20-year high

Photo credit: 8LettersUK

Data released by the ABS today shows that the home building recovery has brought activity to its highest in twenty years, which the Housing Industry Association says is "beyond almost everybody's most optimistic expectations".

Indeed, construction activity in Australia plunged in early 2012, explains HIA Senior Economist Shane Garrett. Now, it has broken the 180,000 mark.

During the June 2014 quarter, new housing starts totalled 45,527 in seasonally-adjusted terms. Despite representing a 6.9 per cent decline on the previous quarter, today’s figures mean that starts during 2013/14 totalled 180,833. This was the highest 12-month total since March 1995.

The rise is "very welcome", adds Garrett, but warns that there is "no avoiding the downside" of the figures.

During the June 2014 quarter, detached house commencements slipped by 1.1 per cent while other dwellings (multi-units) saw a 15.0 per cent slide in seasonally-adjusted terms.

"On the renovations side, the volume of work done also fell, with a 3.0 per cent reduction in activity during the June 2014 quarter," continues Garrett.

The new HIA Economics report Housing Australia’s Future estimates that about 186,000 new dwellings will be required annually between now and the year 2050.

"Even in such a strong upturn, we are still short of this requirement today," comments Garrett, which is a "stark illustration of the serious supply-side issues which will need addressing".

The HIA highlights anumber of factors that are holding back the new home building sector, including high taxation, stamp duties, planning restrictions and delays in making land available for development.