New Home Starts Expected To Continue Easing Off Over 2017

The latest ABS data on building activity indicates that new dwelling starts have passed their record peak.

During the September 2016 quarter, new dwelling commencements fell by 2.8 per cent in seasonally-adjusted terms to 55,070. Detached house starts were down by 1.8 per cent compared with the previous quarter, while multi-unit commencements dipped by 3.9 per cent. Over the year to September 2016, new dwelling commencements totalled some 229,336.

HIA Senior Economist, Shane Garrett said new dwelling starts hit all-time record levels during 2016, but today’s data provides further evidence that we’ve left the peak behind.

“The result for the September 2016 quarter represents the second consecutively quarterly decline in new dwelling starts, with a substantial portion of the reduction happening on the multi-unit side," Mr Garrett said.

“In contrast, detached house starts have been holding up quite well. The upturn in new home building between 2012 and 2016 was heavily influenced by increased apartment building with output more than doubling.

“With new home building set to move lower over the next few years, we expect that the higher density market will have to absorb the bulk of the reduction.

"From a peak of over 230,000 starts during 2015/16, we anticipate that new home starts will continue to ease over the next couple of years and bottom out at around 172,000 during the 2018/19 financial year.”

During the September 2016 quarter, only New South Wales (+5.4 per cent) and Queensland (+6.3 per cent) saw increases in new dwelling commencements. The largest decline was in the ACT (-39.6 per cent) followed by South Australia (-20.0 per cent).

There were also large reductions in Western Australia (-13.6 per cent) and Victoria (-9.6 per cent).

Falls in new dwelling starts also occurred in the Northern Territory (-7.6 per cent) and Tasmania (-0.6 per cent) during the September 2016 quarter.