Housing Industry Association (HIA), the voice of Australia’s residential building industry, reports that new home starts eased back in the final quarter of 2014 after touching a record high in the preceding September quarter.

Quoting ABS figures, HIA said that detached dwelling commencements held relatively steady, easing by only 0.9 per cent in the December 2014 quarter, while ‘other dwelling’ commencements (predominantly multi-unit dwellings) fell by 21.4 per cent. On average, the total number of dwellings commenced declined by 10.6 per cent to 48,125 in the quarter.

There were 17.5 per cent more detached dwelling commencements in the 2014 than there were a year earlier, while ‘other dwelling’ commencements increased by 18.4 per cent.

According to HIA Economist Geordan Murray, the 2014 calendar year was the nation’s strongest on record with almost 198,000 new dwellings commencing construction, 18 per cent more than in the previous year. However, the composition of new home building activity has been quite different to previous cycles owing to the large number of multi-unit dwellings commenced in the major capital cities.

While the detached house building segment has contributed to the cyclical upswing over the last few years, activity in this part of the market has not reached the peak levels recorded in previous cycles. In contrast, the number of ‘other dwelling’ commencements has entered record territory.

Geordan Murray observes that the elevated level of new home building in 2014 has helped reduce Australia’s housing shortage; however, availability of a broader mix of housing types will be beneficial to the industry. Policy makers must ensure that the mix of housing types continues to align with the preferences and expectations of the community.

During the December 2014 quarter, new home starts declined in all states with the exception of South Australia where activity increased by 9.3 per cent, and Tasmania where activity increased by 10.0 per cent. New home starts in New South Wales fell by 13.7 per cent, in Victoria by 10.0 per cent, in Queensland by 13.5 per cent, in Western Australia by 4.3 per cent, in the Northern Territory by 22.3 per cent and in the ACT by 31.8 per cent.