Australian residential building recovery stalled in the third quarter of 2013

The recovery in the residential building sector in Australia failed to advance in the third quarter of 2013, according to preliminary figures published by the Australia Bureau of Statistics (ABS).

The value of residential building work done during the quarter was unchanged compared with the previous quarter. There was a decline in detached homes being built but a rise in multi unit homes.

The data shows that the value of work done on multi unit construction increased by 3.9% and was 16.8% above the level recorded in the September quarter of 2012. In contrast, the value of work done on new detached homes declined by 1.6% and was 3.6% below the level in the September quarter a year ago.
 
The value of work done on renovations declined by 3.1% during the quarter to a level 3.3% below the level recorded in the corresponding period last year.

‘The flat result was a balancing act whereby a decline in work done in detached house building and home renovations was offset by a relatively strong increase in the value of work done on multi unit dwellings,’ said Housing Industry Association economist, Geordan Murray.

‘It is good to see activity in the multi unit segment of the market picking up, however the positive impact this should have on Australia’s housing supply is being offset by declining levels of activity in the detached home segment,’ he pointed out.

‘In order to see Australia’s growing population housed in a way that maintains the standard of living the community expects, we need to see broad based increases in the level of activity across the new home building sector rather than just a reallocation of activity between the various segments of residential building,’ he explained.

‘Demographic demand in the future will necessitate a structural increase in the rate of new home building across all types of dwellings when compared with the volumes we have seen over recent decades,’ he added.

Indeed, the latest figures from the ABS in population growth suggest that home building will need to increase. The ABS projection is that Australia’s population could double to 46 million by 2075 but if there is rapid growth this level might be reached by 2058. Even a smaller outcome would see the population reach 26 million by 2020 and 29 million by 2030.

‘The ABS projections send a clear message to policy makers around the country. Ensuring that the supply of new housing can meet the needs of a growing population is an urgent and ever-present policy priority,’ said Murray.
 
‘Housing these people will require a considerably higher average build rate than what has occurred over the last 20 years and that won’t happen without a concerted and cooperative focus on policy reform,’ he added.