National building activity approaching a peak

by YIP01 Feb 2017
Building in Australia’s housing market is approaching a peak while South Australia is likely to experience softer conditions for new housing commitments over the next six to 12 months.

According to new findings from Master Builders Association of South Australia (Master Builders SA), Tasmania and the Australian Capital Territory are also expected to pull back the national average as the eastern seaboard continues to surge ahead, said Matthew Pollock, Master Builders SA’s national manager of housing.

“The latest housing finance statistics are further evidence that building activity in Australia’s housing market is approaching a peak with the number of housing commitments flat, recording a small increase of 0.9 per cent on the previous month,” he said.

“However, that peak is unlikely to come before the end of the financial year and the current pipeline of work is set to support one of the best years for home building activity in Australia’s history in 2017.”

This creates the possibility of a softer landing later down the road, with housing finance commitments and building approvals data likely to show emerging signs of weakness during the first half of 2017. But if managed well, and combined with an expectation for high and sustained population growth, the housing market will continue to be a pillar of the nation’s economic prosperity and jobs growth over the long term.

“New South Wales recorded 16,428 new housing finance commitments in November 2016, and accounted for 30 per cent of all housing finance commitments in Australia over the period,” said Pollock. “Victorian housing finance is also performing well, recording 14,949 new housing commitments in November 2016. Combined, the two accounted for close to two thirds of all new housing commitments in Australia over the month.”

Despite a major home building effort in 2016, expectations for high population growth in 2017, particularly in Australia’s major cities, will mean new home building will have to continue to meet future growing demand.

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