New residential housing construction reached a record high in the September 2015 quarter, official figures have revealed, which will bring substantial benefits to Australia’s slowing economy.
The construction of new homes over the quarter rose 0.5% with a quarterly record of 55,532 new building starts, according to figures from the Australian Bureau of Statistics (ABS). This means that at the September quarter, a record 194,252 homes in total were being built – the most in Australian history. Just over 65% of dwellings being built are apartments.
Over the year to September 2015, work started on a record 215,053 new dwellings, up 13.4% on the year before.
According to Dr Harley Dale, chief economist at the Housing Industry Association, the new home building figures are a stellar result not only for the residential construction industry, but for the wider economy.
“Over recent years households and businesses have faced a barrage of negative chatter about below trend growth and downside risks to the economic outlook,” he said.
“Throughout this time new home construction has posted one of its longest upcycles in history – providing substantial support to Australia’s economic output and levels of employment... [N]ew home construction and its massive spin-off benefits has propped up the Australian economy at a time when no other sector has come to the party.”
Craig James, the chief economist at CommSec agrees, saying the strength in residential construction will prop up the economy and ward off further rate cuts in the near future. However, he says the economy should be mindful of “ingestion problems” in the longer term.
“Strong home building activity will support the economy over the next 12-18 months. As a result, CommSec expects no change to interest rate settings in coming months,” James said.
“There could be an ‘ingestion’ problem as residential projects get completed. If investors can’t find tenants, new homes may be put up for sales, depressing home prices.”
According to the ABS figures, there were 33,713 homes in the September quarter that had been approved for construction but where work hadn’t commenced, down 2% from record highs.