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    New home building activity strengthened in December quarter 2013

    Housing Industry Association

    The Housing Industry Association (HIA) says that the latest data from ABS indicates an ongoing new home building recovery. HIA is the voice of Australia’s residential building industry.

    According to the ABS report, the number of dwelling commencements increased by 8.2 per cent in the final quarter of 2013. Detached house commencements declined by 0.7 per cent in the December quarter of 2013 while multi-unit commencements increased by 21.3 per cent in the same period. 

    HIA Economist, Geordan Murray says the data provides confirmation of what leading indicators had been implying – that the new home building industry rounded out 2013 on a strong note. Original figures show 47,326 dwellings commenced in the December quarter, which was the strongest quarterly result since 2002, even surpassing the highs during the period impacted by the GFC stimulus.

    He explains that growth throughout the duration of the recovery to date has been driven primarily by the NSW and WA markets. However, given that the level of activity in these two markets has now reached historic highs, growth beyond the current levels could be more difficult.

    Geordan Murray points out that it was neither NSW nor WA that drove the growth in the December quarter. Dwelling commencements in NSW rose by a relatively modest 2.8 per cent, while commencements in WA declined by 1.3 per cent. The most notable contributor to the strong growth in dwelling commencements in the December quarter was Victoria, where commencement numbers jumped 11.3 per cent in the quarter owing to a 33 per cent jump in multi-unit commencements. 

    New home building activity in Queensland also grew strongly in the final quarter of 2013 with dwelling commencements lifting 15.8 per cent in the December quarter to around 9,233. Though this is comparable with the healthy level of activity in the middle part of the last decade, the composition of the dwelling types has changed markedly since then with detached dwellings accounting for only 54 per cent of the total dwellings commenced in the quarter. 

    South Australia also posted a strong result; however it is possible that the increase partially reflects activity pulled forward by the ending of the Housing Construction Grant. One will have to allow time to assess whether the strong result in the December quarter is attributable to the change in policy settings or whether the state has indeed mounted a healthy recovery.

    Over the December 2013 quarter, healthy gains in total commencements were evident in Victoria (up 11.3 per cent), Queensland (up 15.8 per cent) and South Australia (up 25.2 per cent). The quarter also saw growth for New South Wales (up 2.8 per cent). Declines recorded in dwelling commencements include Western Australia (down 1.3 per cent), Tasmania (down 12.6 per cent), the Australian Capital Territory (down 13.3 per cent) and the Northern Territory (down 26.6 per cent).

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