ABS Figures Shows Peak and Trough in Australian Building Activity

The Housing Industry Association's Principal Economist, Tim Reardon, says that building activity in Australia peaked in 2016 and is predicted to decline.

The release of building activity figures by the ABS for the first quarter of 2017 shows the level of building activity in all states and territories.

“Building activity has declined to levels last experienced in the middle of 2014, before the record peak in March 2016," said Reardon.

“At the core of this drop in activity is primarily the slow-down in construction of new apartments and units, particularly on the east coast. A record number of apartments are due to come onto the market this year and the next phase of investment is now not likely to occur until the apartments currently under construction clear the market.

“Activity in detached low rise home construction also fell this quarter (-7.7 per cent) as a consequence of a decline across all states and territories.

“It’s important to recognise that the downward trend is not cause for alarm. We are coming down off the back of records levels of activity in recent years, particularly in apartments. The housing industry is well placed to balance cyclical changes in demand and HIA’s forecasts expect that we will return to a growth market before the end of the decade.

“Policy makers should be alert to the changed trend in building activity and ensure that recent policy changes don’t lead to unintended consequences.

“Western Australia (4.1 per cent) and Tasmania (12.3 per cent) were the only states to record an increase in building activity. A sharp drop in apartment construction in Sydney dragged down overall activity in NSW by -17 per cent. South Australia experienced an 11.1 per cent decline, Queensland down -10.2 per cent also due to a decline in unit construction. Victoria dropped by just -1.9 per cent.

“Commencements in both the ACT (-65.8 per cent) and the Northern Territory (43.4 per cent) declined dramatically. The ACT figures are an aberration and activity is returning to longer-term trends."