Building falling over
Total dwelling commencements crashed -11.8 per cent lower to decade lows at 40,700 in the June quarter.
Maybe this wasn't entirely unexpected after a surge during the HomeBuilder period, but in the context of record population growth it's a bit alarming.
Notably starts for attached dwellings - units, townhouses, and apartments - have been running at depressed levels for over a year now.
More concerningly, with many builders going bust - another big developer went into compulsory administration in Western Australia this week - the dwellings in the pipeline are being delivered at a slower pace too.
Completions plunged to 41,670 in the June quarter.
The number of dwellings under construction remains high, despite declining from 243,500 in September 2022 to 241,000.
However, there are question marks about how far advanced many of the projects actually are.
Dwelling completions of around 40,000, after netting out demolitions and obsolete stock, is adding enough housing for about ¼ million people per annum, while population growth has been running at nearly 3 times that level of late.
Tim Lawless of CoreLogic sums up up some of the root causes of the malaise:
Over the past decade, there has been a series of policies in place to constrain lending to investors, from APG 223, crackdowns and restrictions on interest-only and investment lending, and the banking Royal Commission, for example,
In that context, it's not too surprising to see rental vacancies hitting all-time lows.
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I presented a webinar yesterday where one of the participants with an interest in the mortgage broking industry noted that there's been a campaign to return the lending assessment buffer down to a more 'normal' setting of 2.5 percentage points.
However, as far as I can tell it doesn't seem as though that idea will get much traction until inflation is back down towards the target range.
Interestingly banks are competitive and there's a willingness and appetite to lend, but under current settings dwelling construction isn't going to be keeping pace with demand.
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In other news, job advertisements fell by -2 per cent in September to 272,900, on a seasonally adjusted basis.
The cycle peak saw 303,000 job advertisements listed - 15 months earlier, in June 2022 - and things have been gradually easing ever since.
Source: IVI, Jobs & Skills Australia
Both Victoria and New South Wales recorded a significant year-on-year slowing in advertisements.
