New Home Starts Hit 6.5 Year Low

Apartments continued to drag on residential starts, which fell to a 6.5 year low in June.

The June quarter data shows total dwellings commenced was down -5.6 per cent since the start of the year and -8 per cent compared to 2019.

The figures reflect the residential sector just as the Home Builder stimulus package was announced, which slowed the impact of Covid and eventually led to record lending highs in October.

New private sector houses were down -0.8 per cent compared to the March quarter and -8.0 per cent on 2019.

Other residential dwellings including apartments dropped -14 per cent in the quarter and -17.3 per cent compared to the previous year.

ABS construction activity figures for the June quarter also show both residential and non-residential building were down -4.9 per cent and -2.1 per cent respectively down $1.1 billion on the quarter.

Private dwellings commenced

^Source: Australian Bureau of Statistics

CBA senior economist Ryan Felsman said work started on 171,274 new dwellings over the 12 months to June, the lowest number in 6.5 years.

“The decline in dwelling starts in the June quarter likely reflecting the impacts of Covid-19 restrictions, including lockdowns.

“During the pandemic, some building and construction projects have been delayed or cancelled as businesses consolidate their operations and conserve cash.”

The latest ANZ-Property Council survey for October showed increasing confidence in the residential sector, while the Westpac-Melbourne Institute sentiment index surged by 11.9 per cent to a three-month high in October.

However confidence in the office, retail or hotel sectors is still lagging behind.

Recent figures on new home sales from the HIA reveals sales are now 11.8 per cent higher in the seven months since restrictions came into effect.