New home construction pulls back

by Julia Corderoy16 Apr 2015
After reaching a record high in the September quarter of 2014, the number of new home starts eased back in the final quarter of the year, according to official figures.

Figures released by the Australian Bureau of Statistics show that detached dwelling commencements held relatively steady, easing by 0.9% in the December 2014 quarter while ‘other dwelling’ commencements – predominantly multi-unit dwellings – fell by 21.4%. In aggregate, the total number of dwellings commenced declined by 10.6% to 48,125 in the quarter.

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

“The 2014 calendar year was the nation’s strongest on record with almost 198,000 new dwellings commencing construction, 18% 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,” Housing Industry Association economist, Geordan Murray said.

“While the detached house building market has certainly participated in 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 is well into record territory.”

“The elevated level of new home building in 2014 has, no doubt, made a small dent in Australia’s housing shortage and broadening the mix of housing types available will be beneficial. Policy makers must nevertheless ensure that the mix of housing types continues to align with the preferences and expectations of the community, within which detached housing is still the major element.”


  • by New home broker 16/04/2015 9:53:40 AM

    I believe there is still a high demand for new homes however there are significant barriers to overcome:
    - scarcity of land ready to build, developments are being pre-sold to meet developer / lender terms and titles don't release for sometimes 9-12 months later.
    - excessive title release times coupled with unconditional finance clauses of only 3-4 weeks after signing COS means every purchaser faces the risk of losing their deposit if their circumstances change.
    - stamp duty concessions need to be widened for vacant land to include all purchases not just FHB's
    - valuers / banks looking for secondary market sales in new areas need to look at the market price ie sale price (less rebates) as the value, not a discounted value, the bank does that anyway by only lending to 80% without LMI.
    - LMI cover is excessive (nothing new)
    - lender capital requirements (APRA) need to be relaxed for construction products to allow more entrants into the market for greater competition.