Part 2 - Completions roll in
Pete Wargent blogspot
Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.
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"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.
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Wednesday, 12 July 2017
Building boom was the biggest ever; but it's ending
Building boom ending
It's been Australia's greatest ever building boom, but the end of the boom is nigh. Let's take a run through the latest numbers released this morning in the usual three parts.
Part 1 - Housing starts drop sharply
Seasonally adjusted housing starts fell sharply by 11 per cent to 50,395 in the March quarter, to be 19 per cent lower over the year, with unit commencements down by a thumping 29 per cent year-on-year.
When plotting the smoother trend figures the drop doesn't look quite so dramatic, but nevertheless the downturn is underway.
The main driver of the drop has been Queensland, particularly Brisbane apartment starts which have dropped off a cliff since March 2016.
So it's been a genuinely impressive run, but dwelling commencements are now resolutely pulling back.
Part 2 - Completions roll in
A unique feature of this construction boom has been the length of time it has taken for the flood of new apartment projects to be delivered.
However, completions are now starting to flow through nicely, with more than 223,000 completions over the year to March 2017.
And there is still plenty more to come.
Part 3 - Apartment pipeline remains at large
There were still more than 215,000 dwellings under construction at the end of March 2017, including more than 152,000 attached dwellings.
Activity remains particularly high in Sydney, with more than 63,000 attached dwellings under construction across New South Wales at the end of the first quarter of the calendar year (and a massive 82,836 dwellings in total, an all-comers record).
However, more than 40,000 approved dwellings have never been commenced, and nearly 20,000 of these are located in New South Wales.
The wrap - what goes up...
Overall, it can hardly be a huge surprise that the number of dwelling commencements has pulled back sharply over the year to March, particularly for apartments.
There is still a high volume of residential building work in the pipeline, however, while non-residential building approvals have now been trending higher for two years, which will go some of the way to plugging the gap.