Confidence returned to the housing market in the second half of 2019, but the latest figures revealed new home construction is on the decline.
The final Australian Bureau of Statistics numbers for the September quarter saw a significant fall in activity in New South Wales, down by nearly 20 per cent, followed by the Northern Territory, down by 18.5 per cent, and Western Australia, down by 14.8 per cent.
The only areas that saw an increase were Queensland, up by 3 per cent, and South Australia, with a rise of 1.9 per cent.
The Housing Industry Association (HIA) believes ground broken in the September quarter for new homes were likely to have been purchased at the start of 2019 when market confidence was low.
“Onsite building work on a new home typically starts several months after a block of land has been purchased and a builder engaged. The lag can be even longer for new apartments purchased off the plan,” HIA senior economist Geordan Murray said.
“The soft result in the September quarter is more reflective of the weak housing market conditions experienced during in the early part of 2019 than the conditions that we saw in the second half of the year.
“The total number of new homes commenced during the September quarter declined by 11.7 per cent since the June quarter and was down by 27.2 per cent compared with a year earlier.”
The most significant factor driving the downward trend is the fall in the construction of new multi-unit developments.
“The number of dwellings in new multi-unit developments that commenced during the September quarter dropped by 20.6 per cent in the quarter and is down by 39.0 per cent against the level a year ago,” Mr Murray said.
“Commencement of new detached houses also declined during the quarter, but the magnitude of the decline was much smaller. Detached house starts declined by 4.8 per cent during the September 2019 quarter, dropping to a level that is 16.8 per cent below the level recorded a year earlier.
“The second half of 2019 saw a marked improvement in housing market sentiment, and leading indicators suggest that demand for new homes has stabilised. The improved market conditions mean that it has become less likely that the substantial declines in new home starts that characterised 2019 will continue into 2020.”