Home building continues to slump

by Adam Smith31 May 2012

Residential building has slumped again, while housing sales have seen a rise.

Preliminary ABS figures show that the value of residential construction work done fell by 2% in the March quarter. New home building decreased by 1.4%, while renovations fell more sharply, down 5.3%.

"The result is a concern as it suggests not only that dwelling investment will again detract from GDP growth in the March 2012 quarter, but also that the renovations side of the residential building industry is now also facing headwinds," HIA senior economist Andrew Harvey said.

Harvey said the result for renovations was particularly troubling, and renovation spends had previously held up well.

"Renovations have been the positive news story for the residential building industry with the value of total work holding up relatively well, but there are now mounting signs that this side of the industry is slowing," he said.

The results follow some good news for the housing industry, with home sales up 6.9% in April.

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