Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 12 April 2017

More egg boxes

Sydney: last man standing

Building Activity is one of the more complicated data series released by the ABS, so I'll just post the headline figures here. 

Overall the level of residential building activity remained high, increasing quite strongly in 2016 in fact, but nationally it looks as though the peak is now more or less in. 

At the end of the year there was still a historically high number of dwelling units approved and not commenced, but Sydney was beginning to chew its way through the backlog. 

Nationally dwelling commencements remained strong in the fourth quarter of 2016 at more than 57,000 in seasonally adjusted terms.

But in reality the red hot run is now only being held aloft by Sydney, with commencements declining in Melbourne, Brisbane, and Perth. 

New South Wales saw a total of 19,950 dwellings commenced in the fourth quarter, with Victoria sliding to 16,460, and Queensland dropping sharply to 10,150.

Commencements have been falling in Western Australia for nine consecutive quarters.

Plotting the figures in trend terms shows how the residential boom is really just a Sydney story now. 

Supply coming online

At the end of 2016 there were still some 219,384 dwellings under construction, including 152,635 attached dwellings.

The total is slightly lower than the record peak seen in September 2016, indicating that new apartments were already starting to hit the eastern capital city markets towards the end of last year. 

There were a record 82,857 dwellings under construction in NSW at the end of the year, some 62,040 of them being attached dwellings, and so many of them of the 'egg box' variety.

The actual number of dwellings actually completed in 2016 were high, but themselves hardly alarming, including in NSW (58,730), Victoria (59,977), and Queensland (44,983). 

The wrap

While these are big numbers in historical terms, today's largely unnoticed arrivals and departures figures presented some food for thought, with permanent and long term arrivals exploding to 103,570 in February, by some margin the biggest single month on record.

There was also an unprecedented number of education arrivals in 2016, which may be a coincidence or driven by the lower dollar. 

On the other hand, maybe the government has quietly turned on the immigration taps.

Remember that most immigrants to Australia head to the two most populous states, which are also home to the two best performing economies and the highest number of job vacancies.   

Let's hope the new arrivals like egg boxes.