Resi building activity slows -20pc from highs

Construction pipeline challenges

There's a lot of noise about building in the pipeline, and dwellings 'under construction', but of course many projects have been stalled, mothballed, or delayed, and every day there's a news story about another developer or building firm facing insolvency (three more in the past two days).

Overall, residential building activity, as measured in volume terms, has slowed by -19 per cent from the highs.

Capacity issues in the industry also haven't been helped by ongoing strength in infrastructure projects. 

It's nevertheless true that the number of dwellings officially under construction remains high at around 240,000. 

The number of detached houses under construction remains above 100,000, which is very high historically. 

Attached dwelling commencements caught a bounce in the March quarter. 

Overall, though, multi-unit commencements at just under 20,000 remained well down on their highs of of the 2015 to 2018 cycle, when commencements were running at 25-30k per quarter. 

The Housing Industry Association noted that the number of detached house commencements continues to slow.

Dwelling completions came in at a slightly improved (but still pretty slow) 45,000 for the quarter. 

Source; HIA

The wrap

Overall, nothing too unexpected here.

The challenge for countries going down the high immigration route is that there will be a constant and ongoing battle with undersupply.

For example, Canada's population growth ripped to an all-time high 1.2 million over the past year, about triple the levels we saw a decade ago. 

With 'only' 470,000 jobs added, this has seen the unemployment rate in Canada rise to 5.4 per cent.

Australia is following down a very similar path, and unemployment is set to rise here too. 

Today's arrivals and departures figures show that there were more departures from Australia than arrivals in June, which isn't that surprising given that virtually everyone I know is holidaying in Italy or on a Greek island right now.

This has delivered some temporary respite for the rental market.

On the other hand. long-term and permanent migration to Australia is running at record highs, at an annualised pace of close to 500,000.

Source: Westpac, ABS

Interestingly, although Chinese tourism has been sluggish, immigration from China is picking up sharply.

The capital city undersupply story has a way to run yet, then...and probably a few years.