Building Activity Down but Apartments Up 57pc

Apartment building has ramped up despite a slow quarter, according to Australian Bureau of Statistics data for March 2023.

The decline in starts was largely led by a cooling off in the house-build market, down 15.8 per cent year on year, while the apartment starts have jumped almost 12 per cent year on year. 

According to the bureau, the total number of home units starts in Australia rose 14 per cent to 46,546 homes in the March quarter, in seasonally adjusted terms. 

Private sector multi-residential projects drove the increase, rising 57.2 per cent to 19,344 homes. Private sector house starts fell 5.5 per cent to 26,026, following a fall of 4.6 per cent in the December quarter.

HIA senior economist Tom Devitt said the data showed there was 39.1 per cent fewer houses that had begun in the March quarter compared with the peak of June 2021.

“This decline in detached housing commencements is part of the ongoing cooling of the market that is expected to continue well into next year,” Devitt said. 
 
“New home sales have declined sharply since the Reserve Bank started increasing interest rates last May. 

“This is compounding the high volume of earlier projects that are being cancelled across the nation as home buyers struggle to secure finance in the face of ballooning home building and finance costs.”

▲ Source: Property Council of Australia

Devitt said it was the first quarter in almost three years that more houses had been completed than started. 
 
“There were only 28,094 detached houses completed in the first quarter of 2023, 9.6 per cent fewer completions than in the same quarter last year.
 
“Ongoing labour constraints continue to make it very difficult for builders to complete the significant volume of work taken on during the pandemic.
 
“There remains almost 104,000 houses under construction in the first quarter of 2023. This has been a broadly stable volume over the last 18 months and almost double the 57,500 that were under construction heading into 2020.
 
“Costs and supply uncertainties are also holding back the multi-units sector.”

And although the apartment building figures have bounced back, they are significantly off the peak of the apartment boom from 2015 to 2018. 

“There are still 136,000 multi-units under construction around Australia. These need to be completed in order to help accommodate the rapid return of overseas migrants, students and tourists that Australia has seen since it reopened its borders in late 2021,” Devitt said.

“Incredibly tight rental markets around the country require concerted efforts to increase the supply of housing.”

Although SQM data revealed some rental markets were easing across the country, while others had stabilised. 

Most of the eastern seaboard states remained in positive territory, excluding Queensland, where building commencement figures had moved into negative territory, down 0.1 per cent for the quarter, and down 0.7 per cent year on year. 

South Australia, Western Australia and Northern Territory all chalked up a decline in building starts.