Warning sign for governments in housing data
The risk that housing construction has passed its peak has been underlined in official new data released today.
The ABS data on building activity shows a 5.1 percent fall in commencements in the December quarter, and a fall of 2.3 percent on completions.
The numbers show the commencements and completions over the past 12 months remain at record highs – but the fall in starts and completions in the last quarter is revealing.
Building commencements throughout 2015 reached a record 220,887. However, in the December quarter commencements fell from 56,612 to 53,727.
“There is a real risk in these numbers that housing commencements and completions have peaked and could turn south”, said the Property Council’s Chief of Policy and Housing Glenn Byres.
“It is the last thing we need at a time when housing construction is crucial to economic prosperity and we’ve got chronic under supply in our major capital cities.
“While Australia’s largest state NSW had the largest increase in commencements throughout 2015 (up 19.1 per cent for the year), the 14.0 per cent fall in the December quarter is a marker for concern. It is a reminder that NSW needs to get cracking and fix up its planning system, which is still the most dysfunctional in the nation.
“We need policy solutions in place that reduce the time, cost and red tape on projects and make it easier to deliver a sustained period of strong supply. Stronger supply will improve affordability which is vital for home buyers.
“This data is a reminder about the important role property construction plays throughout the economy. It is why we are so concerned about dramatic changes to negative gearing and capital gains tax. These changes are not just a risk to housing construction; they are a risk to jobs and growth.”