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<p>The property boom is officially everywhere.</p>

<p>Data released by the Australian Bureau of Statistics found that every capital city record a rise in residential property prices in the December quarter.</p>

<p>The three per cent gains were the biggest recorded since the December quarter 2019.</p>

<p>The pent up demand from Melbourne's prolonged locked down drove the Victorian capital to be the joint best performer over the three months, with prices up 3.4 per cent, the same as Canberra.</p>

<p>[smartcode_project:default project_id=27728]</p>

<p>Hobart followed, with prices up 3.1 per cent, then Sydney, up three per cent.</p>

<p>Perth's 2.9 per cent gains came in slightly below average, as did Brisbane's 2.7 per cent and Adelaide's 2.6 per cent gains. Weighing the average down was Darwin, however the Northern Territory capital still posted gains of 2.2 per cent.</p>

<p><img alt="" height="868" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/abs_prices.jpg" width="1800"></p>

<p>ABS head of prices statistics Michelle Marquardt said the rise in property prices is consistent with a range of housing market indicators.</p>

<p>"New lending commitments to households, auction clearance rates and days on market all improved during the December quarter."</p>

<p>Annually, residential property prices rose 3.6 per cent, the ABS data found.</p>

<p>[smartcode_project:default project_id=7864]</p>

<p>"This is the first time that all capital cities have seen an annual rise since the December quarter 2014," Marquardt said.</p>

<p>Hobart prices jumped 6.4 per cent, followed by a 5.2 per cent gain in Canberra and 4.2 per cent in Perth.</p>

<p>House prices rose 3.9 per cent in Sydney and 3.7 per cent in Melbourne, while attached dwelling prices rose 1.4 per cent in Sydney and 2.5 per cent in Melbourne.</p>
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The three per cent gains were the biggest recorded since the December quarter 2019

Joel Robinson

Property boom officially everywhere as all state and territory capitals see December quarter growth: ABS

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<p><img src="https://counter.theconversation.edu.au/content/62493/count.gif" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>Despite being one of our oldest public institutions, the Australian Bureau of Statistics’ (ABS) social media campaign for the 2016 Census is a clever nod to the modern zeitgeist.</p>
<p>This census will ask us to “pause” (presumably Netflix) and “make a difference” on the night of Tuesday, August 9.</p>
<p>Held every five years (compared to the ten-year censuses of the UK and US), the ABS describes the census as a:</p>
<p>"Snapshot of Australia, showing how our nation has changed over time, allowing us to plan for the future."</p>
<p>Census data have a real impact on the lives of Australians, from determining political representation through the distribution of electorates, to the allocation of government funding, as well as private investment based on projected demand for goods and services.</p>
<p>Australia uses the census to evaluate how well it is progressing on myriad issues, such as Indigenous policy, the distribution of health outcomes by socioeconomic inequality and to plan for population growth.</p>
<h2>The census’ evolution</h2>
<p>The act of taking a census is as old as civilisation itself; Egyptian, Roman, Byzantine, Persian and Chinese empires all conducted censuses.</p>
<p>The primary purpose of these seems to have been twofold: establishing the size and strength of a potential army in case of war, and enabling effective taxation (in large part to fund these armies).</p>
<p>The industrial and scientific advances of the 18th and 19th centuries led to a dramatic shift in the relationship between the state and the public, and in the ability to statistically “manage” populations.</p>
<p>Economics and sociology as developing academic disciplines further motivated population data collection. The defining idea was that a nation’s physical and moral “progress” could be measured statistically. Thus, the modern census was born.</p>
<p>Today the census plays an essential role in Australia’s public life. It provides the raw data with which policies can be planned and outcomes assessed.</p>
<p>While knowing Australia’s total population at one point in time might seem of little use (as this number is almost immediately out of date), the question of exactly where people are living, and the changing characteristics of these local populations, is of vital importance.</p>
<h2>Technological developments and privacy</h2>
<p>The 2016 Census is in some ways a case of continuity and change. No new questions have been added since the 2011 Census, which makes it easier to compare outcomes across both years.</p>
<p>The big change the ABS is pushing in 2016 is the ongoing move to a more digital census. It is hoping 65% of households will complete the 2016 Census online, compared with 33% in 2011.</p>
<p>Another more controversial change in 2016 is the decision to retain names and addresses temporarily in order to link census results with other administrative data for research and policy assessment purposes.</p>
<p>These records will be kept for four years. During that time they are protected with both digital and physical safeguards. However, privacy groups and those concerned about the potential for government overreach have flagged worries.</p>
<h2>Sensitive information</h2>
<p>Providing the government with personal information, especially on religion or race, is a sensitive issue. This is one of the reasons the question on religious affiliation has remained optional in every Australian census since the first in 1911.</p>
<p>In the early colonial censuses, with their origins in the military-style “musters” of Governor Arthur Phillip, convict status was also a sensitive and unpopular question. It was eventually removed in the second half of the 19th century. The first simultaneous census of all Australian colonies was held in 1881 as part of a wider census of the British Empire.</p>
<p>By this time, the question of race had gained prominence, with the population divided into Australians, Chinese (who had arrived in large numbers during the gold rush) and Indigenous Australians. However, Indigenous Australia would not be properly included in the census count until 1971.</p>
<h2>Data retention</h2>
<p>The history of the Australian census also tells an interesting story about the changing attitude towards the retention of personal information, as reintroduced this year.</p>
<p>In 1891, Victorian statistician Henry Hayter chose to destroy the original census forms rather than hand them over to the police, who wanted access to private records to track down suspected criminals.</p>
<p>Australia has been an outlier in its commitment to destroying individual census records throughout the 20th century. In Canada, the UK and the US, personal records are retained under embargo.</p>
<p>The census represents in many ways the goals and values of our time; we measure what we think is important. But with power (to measure) comes great responsibility, and trust in public institutions like the ABS is therefore crucial.</p>
<p><em><span class="fn author-name">Nicholas Biddle is f</span>ellow, Australian National University and can be contacted <a href="https://theconversation.com/profiles/nicholas-biddle-10171" target="_blank">here</a>.</em></p>
<p><em><span class="fn author-name">Maxine Montaigne is </span>PhD student, Economic History, London School of Economics and Political Science and can be contacted <a href="https://theconversation.com/profiles/maxine-montaigne-10699" target="_blank">here</a>.</em></p>
<p><em>Both are authors for The Conversation.</em></p>
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jchancellor-FAypfDUnLy

What is the census, and why does it matter?

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<p>Private sector house approvals jumped 6.1 per cent over November to reach their highest levels since 1999, figures released by the ABS found.</p>

<p>They've now soared by 40 per cent since June.</p>

<p>Daniel Rossi, director of construction statistics at the ABS, said that Federal and state housing stimulus measures and low interest rates have resulted in strong demand for detached dwellings.</p>

<p>There were 11,489 houses approved for building over November.</p>

<p>Queensland led the way in approvals, up 17 per cent, followed by Western Australia up 7.5 per cent.</p>

<p>South Australia saw 2.8 per cent more private sector houses approved, Victoria 1.5 per cent and New South Wales 0.7 per cent.</p>

<p><img alt="" height="1083" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/november_building_approvals.jpg" width="1200"></p>

<p>Total building approvals were up 2.6 per cent, beating economist forecasts of a two per cent rise.</p>

<p>Over October approvals rose 3.6 per cent.</p>

<p> </p>
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There were 11,489 houses approved for building over November

Private sector house approvals reach highest levels since 1999

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<div>The ABS released its <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/8755.0" target="_blank">Construction Work Done</a> figures for Q1 2015 which saw total construction work done decline by 2.4% to $48.4 billion.</div>
<div> </div>
<div>It's a bit of an awkward data release with a few moving parts, but let's see if I can simplify a few of the key messages here in three short parts.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Part 1 - Total construction slips</span></strong></div>
<div>
<br>As you can see from my chart below, private sector building work is responding rather nicely to low interest rates.</div>
<div> </div>
<div>Unfortunately, on the other hand, spend in the public sector is contributing very little to the cause.<br><br>Quarterly public sector expenditure fell to below $2.2 billion, which is far below the more stimulatory levels seen through the financial crisis which peaked at more than $5 billion.<br><br>The economy could evidently use some infrastructure investment, though I'm not at all sure we'll get it.</div>
<div> </div>
<div>Meanwhile engineering construction, largely comprised of resources capital expenditure, continues to capitulate, now more than 20% lower over the past year to $24.8 billion in Q1, from a peak of $33.2 billion in 2012.</div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargent1.jpg" alt=""></div>
<p> </p>
<div>The net result is that total construction work done declined further in the first quarter by 2.4% to $48.4 billion.</div>
<div> </div>
<div>This is still a very high level of activity in historical terms, but now some 8.8% lower than one year ago.</div>
<div> </div>
<p><img src="/images/2015/05/28/wargent2.jpg" alt=""><br><br></p>
<div>The one shining light for construction - which you will have seen with your own eyes if you live in one of the major capital cities - is residential construction, which continues to pulse along.</div>
<div> </div>
<div>House building work done is picking up sharply, while the value of building work done relating to units and apartments (denoted by the red line below) continues to surge to new record highs through this cycle.</div>
<div> </div>
<div>Higher density developments - which tend to be located in cities and come with associated expensive land remediation costs - are contributing a surprisingly high proportion of residential building work done in chain volume measures terms.</div>
<p> </p>
<div class="separator"><img src="/images/2015/05/28/wargent3.jpg" alt=""></div>
<div class="separator"><span style="line-height: 1.3em;"> </span></div>
<div>Major renovations work, denoted by the green line, continues to flatline, and is basically on life support outside Sydney.</div>
<p><strong><span style="text-decoration: underline;">Part 2 - State versus state building</span></strong></p>
<p><span style="line-height: 1.3em;">The value of building work done is being driven by activity in Melbourne, Sydney and Brisbane, in that order, which should continue to support construction employment in those cities, combined with the associated </span><span style="line-height: 1.3em;">multiplier</span><span style="line-height: 1.3em;"> effect.</span></p>
<div>The building boom is largely bypassing the southern states, and this has been reflected in benign (Hobart) or negative (Adelaide) employment growth in the respective capitals of these states. </div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargent4.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>Looking at the major component parts, Melbourne continues to be the undisputed king of house building, while Queensland and Western Australia saw a decent lift in activity in the first quarter of this year.</div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargeent5.jpg" alt=""></div>
<p><br><span>But the real fun and games are taking place in the apartment construction sector.</span></p>
<p><span style="line-height: 1.3em;">Sydney and Brisbane may be approaching full capacity in this industry, which a dearth of bricklayers and project managers on the eastern seaboard being reported by the Reserve Bank's liaison, despite the legions of construction workers becoming available for transfer as they are released from resources contracts (more on this below). </span><span style="line-height: 1.3em;"> </span></p>
<div>Activity in New South Wales pulled back a little in Q1, but Melbourne apartment construction continues to rip to record high levels, with nearly $6.5 billion of work done over the past year in Victoria, and $1.8 billion in the first quarter of 2015 alone.<br><br>Heady times.</div>
<div> </div>
<div class="separator"><img src="/images/2015/05/28/wargent6.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>Clearly this is the macro level data only, but the figures clearly imply a looming oversupply of units and apartments in some locations.<br><br>Prospective investors clearly need to understand the property markets at a suburb and micro level in this respect.<br><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">Part 3 - The mining cliff</span></strong>
</div>
<div><strong><span style="text-decoration: underline;"> </span></strong></div>
<div>If you were hoping for good news for resources regions from this release, I'm afraid that there is none to report.</div>
<div> </div>
<div>Engineering construction work done held up reasonably well in Victoria, but everywhere else of note saw sharp declines, and particularly so the main mining states.</div>
<div> </div>
<div>The one exception in recent quarters had been the Northern Territory, with heavy spend related to the $34 billion Ichthys project pushing up engineering construction work done to record highs for the Top End over the preceding two quarters.</div>
<div>
<br>However, even the Northern Territory saw engineering construction work done decline from $2.1 billion to $1.7 billion in the first quarter, with some delays to the planned 2017 start-up date having been reported related to Inpex.</div>
<div class="separator"> <span style="line-height: 1.3em;"> </span>
</div>
<div class="separator"><img src="/images/2015/05/28/wargent7.jpg" alt=""></div>
<div> </div>
<div>The chart above tells its own story, and there is little else but woe ahead for a number of mining town economies. </div>
<div> </div>
<div>The ongoing capitulation of house prices in the Pilbara and Moranbah have been well enough documented, but there are many more echo-corrections in the post across regions which have been propped up through the once-in-a-century mining construction boom. </div>
<div>
<br>My chart packs have shown here previously that the pipeline for mining capital expenditure is desperately weak, and there will be further data to report on expected capital expenditure declines later this morning.<br><br>Capex related to Ichthys still has a way to run, granted, while Adani is hoping to proceed with its $10 billion thermal coal project (despite the minor inconvenience issue that at today's prices the project can barely be viable).<br><br>But these monster projects aside, weakening commodity prices will ensure that mining investment is heading all the way back down where whence it came, which is why we call it a commodity <em>cycle</em>.</div>
<p><strong><span style="text-decoration: underline;">The wrap</span></strong></p>
<div>This negative result will breathe very life into the GDP result for the first quarter, while a further decline in Australia's terms of trade will also act as a drag.</div>
<div> </div>
<div>Economic growth may not be stone dead flat in Q1, but it seems unlikely to be a great deal better than that, which could drag the annual result down to well below 2% over the first half of this calendar year.</div>
<div> </div>
<div>With inflation forecasts having been revised down and further macro-prudential tools now being deployed by lenders, futures markets see every chance that the next move in interest rates will be down again to below 2%.</div>
<div> </div>
<div>Perhaps the twist in the tail here is that macro-prudential tools on lending to property investors mean lower interest rates for longer?</div>
<div> </div>
<div>
<em><span>PETE WARGENT</span> is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br><p><em>His book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' is out now.</em></p>
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pwargent-M4siyDbqQY

Major renovations work continues to flatline: Pete Wargent

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<div>Population growth in Australia has slowed from its recent peak of a shade above 405,000 per annum in September 2013 back to around 354,600 per annum on the latest figures.</div>
<div> </div>
<div>This headline number will have some way to fall yet, with the December 2014 figures yet to be reported.</div>
<div> </div>
<div>However, a rebound is in the post in time.</div>
<div> </div>
<div>In the summer month of January 2015, traditionally a strong month for long term arrivals, the <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/3401.0/" target="_blank"><em>Australian Bureau of Statistics</em> figures</a> recorded a bounce from 52,160 to 76,310, although the January result is still 9 per cent lower than one year ago.</div>
<div> </div>
<div><img src="/images/2015/06/09/wargent1.jpg" alt="" width="751" height="366"></div>
<div> </div>
<div> </div>
<div>
<div>On the departures side, however, long term and permanent departures also declined in January from 46,740 to 42,100, which notably is a below<strong> </strong>figure than the prior year comparative.</div>
<div> </div>
<div>On a rolling annual basis net long term migration of 318,560 sits some 22 per cent below the most recent peak of January 2013.</div>
<div> </div>
<div><img src="/images/2015/06/09/wargent2.jpg" alt="" width="673" height="324"></div>
<div> </div>
<div>
<div>When it comes to the long term and permanent departures data, stated intentions when ticking boxes on forms are one thing, but today's reality is quite another.</div>
<div> </div>
<div>Boomerang departures are one of the reasons that our capital cities appear so crowded, despite the apparently slowing population growth data.</div>
<div> </div>
<div>On the one hand we now have record high short term arrivals at close to 7 million per annum.</div>
<div> </div>
<div>And meanwhile most of those who claim to be migrating overseas permanently have "pulled a boomerang" within a year of leaving.</div>
<br><div>
<a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3401.0Main%20Features2Jan%202015?opendocument&amp;tabname=Summary&amp;prodno=3401.0&amp;issue=Jan%202015&amp;num=&amp;view=" target="_blank">Analysis</a> of prior years' data from the <em>Australian Bureau of Statistics</em> reveals that while ostensibly more than 380,000 Australians left the country on a long term or "permanent" basis over the past 12 months, more than 80 per cent of them are likely return home within just a year!</div>
<br><div><span><span><em>"Analysis shows that the majority of those with an intention of permanently departing, return to Australia within the following year. </em></span></span></div>
<div><span><span><em> </em></span></span></div>
<div><span><span><em>For example, in the calendar year 2011, out of the 84,240 Australian residents who stated they were departing permanently, only 15,890 spent 12 months or more overseas."</em></span></span></div>
<div> </div>
<div>So much for the "long term-ness" of the long term departures, if you'll kindly pardon my dreadful English.</div>
<div> </div>
<div>Perhaps those pastures further afield aren't as greener-er as what people think they are, and that's why they done that.</div>
<div> </div>
<div>OK I'm getting rather grammatically bogged down here, so let's move on to look at...</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Record high visitors (the delayed Oprah effect)</span></strong></div>
<div> </div>
<div>Shifting seamlessly along to short term arrivals we can see that visitors to Australia have sprinted to their highest level on record at more than 6.9 million.</div>
<div> </div>
<div><img src="/images/2015/06/09/wargent3.jpg" alt="" width="829" height="390"></div>
<div> </div>
<div>
<div>The idea that Kiwis are flocking home to rediscover the beauty of their homeland is an appealing narrative, but also one that has been overplayed.</div>
<div> </div>
<div>In fact, record numbers of New Zealanders arrived in Australia in the past year on a "short term" basis at close to 1.25 million.</div>
<div> </div>
<div>There has also been a notable surge in the number of American visitors to Australia to a record 555,300 on a rolling annual basis.</div>
<div> </div>
<div>Oprah Winfrey said it'd happen, and it seems she was right.</div>
<div> </div>
<div>Although the detailed figures do show a spike relating to her December 2010 visit - from memory she brought along a few hundred whooping guests, and even greater numbers of security guards and filming crew - it is only in the past 12 months that American visitor numbers have really picked up strongly.<br><br>Naturally the decline of the Aussie dollar towards the mid 70 cent range against the greenback is a big driver here. </div>
<div> </div>
<div><img src="/images/2015/06/09/wargent4.jpg" alt="" width="893" height="434"></div>
<div> </div>
<div><span>And the below mega-trend, I've documented here often previously.</span></div>
<div><span> </span></div>
<div><span><img src="/images/2015/06/09/Screen%20Shot%202015-06-09%20at%209.45.00%20AM.png" alt="" width="744" height="341"></span></div>
</div>
<div> </div>
<div>
<span>Expect more of the same based upon what I've seen around the traps in 2015.</span><br><br><strong><span style="text-decoration: underline;">Asian settlers </span></strong><br><br><div>In terms of settlers in Australia the trend has clearly been away from Brits and Kiwis since the financial crisis and towards Chinese and Indians.<br><br>
</div>
<div>However, there was a reasonable rebound in the number of New Zealander settlers in January so this particular downtrend may have run its course for now, although Kiwi settler numbers are still clearly down by 10 per cent or so from a year ago.</div>
<div> </div>
<div>Poms clearly are evidently still opting to stay at home, though.</div>
<div> </div>
<div><img src="/images/2015/06/09/Screen%20Shot%202015-06-09%20at%209.46.16%20AM.png" alt="" width="817" height="411"></div>
<div> </div>
<div><span>The last 12 months has seen some 71,310 settlers from Asia, another mega-trend that shows no real sign of abating.</span></div>
<div><span> </span></div>
<div><span><img src="/images/2015/06/09/Screen%20Shot%202015-06-09%20at%209.47.21%20AM.png" alt="" width="828" height="418"></span></div>
<div> </div>
<div> </div>
<div>
<div id="post-body-3022590133789834441" class="post-body entry-content">
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>The rolling long term net migration figures imply that Australian population growth will sink back towards the low 300,000s range over the near term.</div>
<div> </div>
<div>However, a complex range of factors will combine to drive a rebound in due course. </div>
<div> </div>
<div>Not least of these trends is that most who claim to be slinging their hooks for good don't even make it past year one before "pulling a boomerang".</div>
<div> </div>
</div>
<div class="post-footer">
<em><span>PETE WARGENT</span> is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br><p><em>His book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' is out now.</em></p>
</div>
</div>
</div>
</div>
</div>
<div> </div>
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Boomerang departures drive population growth rebound: Pete Wargent

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<p><span>The ABS released its consolidated <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8782.0.65.001Main+Features1Mar%202015?OpenDocument" target="_blank"><span>Construction Activity</span></a> data for the March 2015 quarter this week. </span></p>
<div id="post-body-7503557364222292087" class="post-body entry-content">
<div>No real surprises to be found here, based upon what we have already seen.</div>
<div> </div>
<div>Resources construction continues to decline apace, with engineering construction in chain volume measures terms declining by a further 7.0% in the first quarter of the calendar year, to be down by more than 20% year-on-year.<br><br>Recent commodity price action suggests that the pace of the decline may even accelerate from here. </div>
<div> </div>
<div>On the positive side of the ledger, as implied by record high building approvals, residential construction has begun to respond to low interest rates, increasing very strongly by more than 5% in Q1 to be up by 11.9% over the past 12 months.</div>
<div> </div>
<div>Non-residential building was up by 1.3% in the March quarter, but has increased only by a paltry 0.7% over the past year.<br><br>Here's the chart: </div>
<div> </div>
<div><a href="https://1.bp.blogspot.com/-DDxrvVs-G9A/VamSG2DNnHI/AAAAAAAAW_w/9aD2jXo9y1s/s1600/Construction1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-DDxrvVs-G9A/VamSG2DNnHI/AAAAAAAAW_w/9aD2jXo9y1s/s1600/Construction1.jpg"><img src="https://1.bp.blogspot.com/-DDxrvVs-G9A/VamSG2DNnHI/AAAAAAAAW_w/9aD2jXo9y1s/s640/Construction1.jpg" width="640" height="280"></a></div>
<br><div>Piecing these figures together it's clear that residential construction alone will not fully compensate for the decline in mining capital expenditure, with total construction activity of $48.3 billion now declining back to the levels seen in Q4 2011.</div>
<div> </div>
<div>That said, $48.3 billion is still an elevated level of activity in historical terms...for now at least.</div>
<div> </div>
<div><a href="https://4.bp.blogspot.com/-YDgBofnRhbY/VamSGwEWp2I/AAAAAAAAW_s/O5apxmfsbgQ/s1600/construction2.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><a href="https://4.bp.blogspot.com/-YDgBofnRhbY/VamSGwEWp2I/AAAAAAAAW_s/O5apxmfsbgQ/s1600/construction2.jpg"><img src="https://4.bp.blogspot.com/-YDgBofnRhbY/VamSGwEWp2I/AAAAAAAAW_s/O5apxmfsbgQ/s640/construction2.jpg" width="640" height="288"></a></div>
<br><div>The full force of the challenge will come when the last of the mega projects finally reaches completion, with a number of massive projects still in the construction phase such as the $34 billion Ichthys LNG project in the Northern Territory.<br><br><strong><span style="text-decoration: underline;">Regional centres</span></strong><br><br>The big picture is that as part of this rebalancing of the economy construction activity - and therefore employment - is shifting back away from the regions and towards the largest capital cities.<br><br>The latest unemployment rate figures for Sydney (4.7%), Brisbane (5.2%) and Melbourne (5.8%) may prove to be seasonally low, but the smoothed rolling 12 monthly data does suggest that unemployment rates in all three of the most populous cities may just be trending steadily down.</div>
<div> </div>
<div>
<a href="https://4.bp.blogspot.com/-7ysRISR7K_4/Varagu2GulI/AAAAAAAAXAw/Qkiq-q3Y2zc/s1600/CAPCITY.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://4.bp.blogspot.com/-7ysRISR7K_4/Varagu2GulI/AAAAAAAAXAw/Qkiq-q3Y2zc/s1600/CAPCITY.jpg"><img src="https://4.bp.blogspot.com/-7ysRISR7K_4/Varagu2GulI/AAAAAAAAXAw/Qkiq-q3Y2zc/s640/CAPCITY.jpg" width="640" height="290"></a></div>
<br>The economy is Sydney in particular is thriving. Indeed, with employment, retail trade and house prices all booming, monetary policy settings are all too easy for the harbour city.<br><br>Unemployment rates in Newcastle and Lake Macquarie seem to have steadied of late, but the trend in the Hunter is still upwards for now.<br><br>It's likely to be a tough period of adjustment for towns in the Upper Hunter such as Muswellbrook and Singleton, with further job cuts at BHP Billiton's Mr. Arthur reported to be "imminent".<br><br>It is worth noting that directly the mining industry is only a relatively small employer, but the reversal of the mining capital expenditure boom does have significant flow-on effects to other ancillary industries.<br><br>Labour market conditions had seemed to be picking up in the Illawarra, but it is nevertheless the case that the outlook for domestic steelmaking remains potentially bleak.<br><br><em>The Australian</em> put it fairly bluntly, stating that the closure of BlueScope's Port Kembla steelworks is "a matter of when, not if".<br><br>A recent poll in the Illawarra Mercury showed that more than 70% of respondents believe that the closure of the plant would cripple the Illawarra economy.</div>
<div> </div>
<div>
<a href="https://1.bp.blogspot.com/-1QB4q-M4068/Vardl9i8mhI/AAAAAAAAXBE/4CU4N8kIH2Q/s1600/NSW.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://1.bp.blogspot.com/-1QB4q-M4068/Vardl9i8mhI/AAAAAAAAXBE/4CU4N8kIH2Q/s1600/NSW.jpg"><img src="https://1.bp.blogspot.com/-1QB4q-M4068/Vardl9i8mhI/AAAAAAAAXBE/4CU4N8kIH2Q/s640/NSW.jpg" width="640" height="278"></a></div>
<br>Parts of regional Queensland have similar tales to tell.<br><br>Again, unemployment rates from month to month don't tell us a great deal, and things seem to have stabilised in some regions, but the general trend has been towards unemployment rates reverting higher as the resources investment boom phase falls away.</div>
<div> </div>
<div>
<a href="https://4.bp.blogspot.com/-gQD7HHdogLk/VaragsgYkoI/AAAAAAAAXAo/odZ9tSHh_O0/s1600/QLD.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://4.bp.blogspot.com/-gQD7HHdogLk/VaragsgYkoI/AAAAAAAAXAo/odZ9tSHh_O0/s1600/QLD.jpg"><img src="https://4.bp.blogspot.com/-gQD7HHdogLk/VaragsgYkoI/AAAAAAAAXAo/odZ9tSHh_O0/s640/QLD.jpg" width="640" height="286"></a></div>
</div>
<br><div>Towns facing something of an uphill struggle include Dalby, Chinchilla, Roma, Moranbah, Emerald., Dysart, Bowen and others.<br><br>Gladstone has also been going through its own transition phase over the past year or two.<br><br>Tourism regions on the other hand should benefit from the ongoing depreciation of the Aussie dollar.</div>
<div> </div>
<div>
<a href="https://3.bp.blogspot.com/-yeRSdxu4_5w/VatfKwQNUBI/AAAAAAAAXCQ/AgVE3IgBslA/s1600/tourism.jpg" target="_blank">Click to enlarge</a><br><br><div class="separator"><a href="https://3.bp.blogspot.com/-yeRSdxu4_5w/VatfKwQNUBI/AAAAAAAAXCQ/AgVE3IgBslA/s1600/tourism.jpg"><img src="https://3.bp.blogspot.com/-yeRSdxu4_5w/VatfKwQNUBI/AAAAAAAAXCQ/AgVE3IgBslA/s640/tourism.jpg" width="640" height="278"></a></div>
</div>
<strong><span style="text-decoration: underline;">The wrap</span></strong><br><br><div>There is not a lot new here, of course, and the rapid decline of engineering construction has evidently been in the post for some time now. </div>
<div> </div>
<div>Although it is generally reported that a decline in construction is a "bad thing", it is also clear that Australia couldn't go on building mines for ever - at some stage they need to produce exports. </div>
<div> </div>
<div>
<em>Reductio ad absurdum</em>, if any decline in construction activity is bad, then Australia would've been better off not having a mining boom in the first place.</div>
<div> </div>
<div>That said, the rising<a href="https://petewargent.blogspot.com.au/2015/07/city-versus-regional-jobs-divide-widens" target="_blank"> </a>levels of regional unemployment reported over the past week represent compelling evidence that many resources-influenced regions are set to be hit hard by declining demand in the years ahead.</div>
<div> </div>
<div>On the other hand the largest capital cities are benefiting from a boom in residential construction in particular together with the associated multiplier effect.</div>
<div> </div>
<div>One consequence of this is that certain inner city areas will evidently end up with an oversupply of apartments, particularly of high rise stock. Unit developments marketed overwhelmingly to investors may include those to avoid.</div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
</div>
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Construction activity declines in the regions: Pete Wargent

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<p>Construction work done missed expectations in the fourth quarter shrinking by another 3 per cent to $51.1 billion. </p>
<div>That follows on from a significant contraction in Q3, so in the second half of 2018 construction work done slowed by about 7 per cent overall.</div>
<div> </div>
<div>Quite nasty on the face of it, although we were coming off a high base. </div>
<div> </div>
<div>The engineering construction work done figures took a 5 per cent hit in Q4, which sounds quite dire at first blush.</div>
<div> </div>
<div>To be fair, the ABS has never gone big on accruals accounting for one-offs like the LNG Prelude platform, and as the Gorgon and Ichthys projects drop off the headline figures will inevitably appear weak - yet the underlying figures aren't quite so bad.</div>
<div> </div>
<div>In fact mineral exploration spend has been on the rise, so investment and mine restarts will likely pick up, especially in Western Australia. </div>
<div> </div>
<div>Here are the trend figures for engineering, in chain volume measures terms (you can click to expand the charts).</div>
<div> </div>
<div><a href="https://2.bp.blogspot.com/-vHa4gkejwfc/XHXfv_tDHhI/AAAAAAAAutU/tZU6tx8YpQsd2_kiSR5ZznERJZye_7BAACLcBGAs/s1600/A1.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-vHa4gkejwfc/XHXfv_tDHhI/AAAAAAAAutU/tZU6tx8YpQsd2_kiSR5ZznERJZye_7BAACLcBGAs/s640/A1.jpg" width="640" height="374" data-original-height="803" data-original-width="1367"></a></div>
<p> </p>
<div>Residential construction work dropped by about 3½ per cent in the fourth quarter, although overall activity was actually still quite high on these estimates. </div>
<div> </div>
<div>A significant driver of the squeeze was slowing Sydney and Brisbane apartment construction, and there'll be plenty more to come here in 2019. </div>
<div> </div>
<div><a href="https://2.bp.blogspot.com/-iOylhEeJli8/XHXfwEaU6iI/AAAAAAAAutc/1WlaQhkwTqYA1J_O_tsLAYo-jm3j10fEwCLcBGAs/s1600/A2.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-iOylhEeJli8/XHXfwEaU6iI/AAAAAAAAutc/1WlaQhkwTqYA1J_O_tsLAYo-jm3j10fEwCLcBGAs/s640/A2.jpg" width="640" height="376" data-original-height="815" data-original-width="1387"></a></div>
<p> </p>
<div>For completeness, quarterly 'other residential' work done slowed by about 4½ per cent in H2 2018 from $8.2 billion to $7.8 billion.</div>
<div> </div>
<div>In my humble opinion there could well be another couple of billion of quarterly declines to come here in 2019 and beyond, even if Australia is moving more towards attached dwellings and medium-density living. </div>
<p> </p>
<div><a href="https://4.bp.blogspot.com/-_ipAqrmh5jM/XHXfvygOfhI/AAAAAAAAutY/eBW_Qxir5zgbz2qFMTYqJOok537AOZ0wQCLcBGAs/s1600/A3.jpg" target="_blank"><img src="https://4.bp.blogspot.com/-_ipAqrmh5jM/XHXfvygOfhI/AAAAAAAAutY/eBW_Qxir5zgbz2qFMTYqJOok537AOZ0wQCLcBGAs/s640/A3.jpg" width="640" height="392" data-original-height="834" data-original-width="1361"></a></div>
<div> </div>
<div><strong>The wrap</strong></div>
<div> </div>
<div>Overall, a fairly ordinary miss on expectations. </div>
<div> </div>
<div>There are still too many partials to be reported for Q4 2018 to have any level of certainty, but while a technical recession perhaps remains unlikely, in per capita terms it looks very possible.</div>
<div> </div>
<div>Banks on strike; no chance of a hike.</div>
<div> </div>
<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></div>
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Construction misses in Q4: Pete Wargent

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<p>Last week, I noticed Craig James, chief economist of Commsec, pointing out to David "Kochie" Koch that although wages growing have been growing slower than prices, household incomes are actually growing at the fastest pace in two years, increasing by 4.7% in the last 12 months.</p>
<p>While wages growth has indeed slowed (<a href="https://petewargent.blogspot.co.uk/2014/05/wages-grow-at-26" target="_blank">as I analysed here,</a> among other places), apparently household disposable incomes have been rising more quickly. Interesting statistic I thought, so I asked "CJ" for the source.</p>
<p align="center"><img src="https://3.bp.blogspot.com/-7SzKL4Y4BIU/VCF5vBSJ3TI/AAAAAAAAP70/Yhw_QqERMLs/s1600/HICJ.jpg"> </p>
<p>Straight from the National Accounts, advised CJ. So I thought I'd take a little look to confirm or deny.</p>
<p><strong>Household gross incomes rising</strong></p>
<p>First, I ran the seasonally adjusted household income data from the National Accounts.</p>
<p>As you can see from the green line circled below, after a rampant boom in employee compensation spurred on by Australia's mining boom, income growth from paid employment has slowed since December 2012.</p>
<p>Although the trend does remain up on a national basis, in real terms wages are at best flat and at worst declining moderately.</p>
<p>Of course there are many forms of income including dividends, rent, social assistance, other transfers, and more besides, and overall household incomes have increased at the significantly faster pace of 4.4% seasonally adjusted over the last year according to the Australian Bureau of Statistics (ABS) - in essence, everything that is not wages has increased in real terms.</p>
<p> </p>
<p align="center"> <img src="https://2.bp.blogspot.com/-8H1Wz0wmWcQ/VCF5psR7OkI/AAAAAAAAP7Q/opfMA4K1EVA/s1600/HI1.jpg"></p>
<p>Still, even this income growth cannot fully account for a 4.7% rise in household disposable incomes.</p>
<p><strong>Payables down?</strong></p>
<p>The big mover in terms of payables in recent decades has of course been interest paid on dwellings, which skyrocketed until September 2008, then collapsed as interest rates were slashed and house prices eased. Then it repeated the trick once again from September 2011 as the latest easing cycle took hold.</p>
<p>With interest rates significantly closer to the zero bound than historically has been the case and household debt levels today much higher than they were before the deregulation of the banking system, relatively small adjustments to mortgage rates can result in wild swings in total interest payments on dwellings. And how!</p>
<p align="center"><img src="https://3.bp.blogspot.com/-xFfk72ZbyRo/VCF5p2fT1FI/AAAAAAAAP7U/ucfhOLYzSDo/s1600/HI2.jpg"> </p>
<p>With most mortgage debt being charged on variable rate products, this explains why Australia's housing market is so sensitive to shifts in interest rates, and why only a few rate hikes would quickly quell speculative sentiment and swiftly end the property price uptrend for this cycle.</p>
<p>Why? Because the people lumbered with the highest mortgage debt as a percentage of their household income are those at the margin i.e. those buying much of the property which transacts.</p>
<p>It is difficult to draw hard conclusions from macro level data, but the two charts above show that for existing homeowners on variable rate mortgages, disposable income has surely roared higher in the period since the dramatic peaks in interest repayment levels of September 2008 and September 2011 respectively.</p>
<p>Anyone with existing mortgage debt who has remained in employment will appreciate just how comparatively easy life is with a standard variable rate of 5.2% rather than the 9.6%, we saw as recently as July and August 2008.</p>
<p align="center"><img src="https://www.rba.gov.au/speeches/2013/images/sp-so-230413-graph11.gif"> </p>
<p style="text-align: left;" align="center"><em>This article continues on the next page. Please click below to continue. </em></p>
<hr class="system-pagebreak">
<p><strong>Household income accounts</strong></p>
<p>On a national basis total gross income dwarfs property payables largely because most Australians are not mortgaged to the eyeballs as is widely believed. </p>
<p>Depending on your state, between a quarter and a third of homes <a href="https://petewargent.blogspot.co.uk/2014/05/dynamics" target="_blank">are owned debt free</a> while mortgage holders over recent years have been moving well ahead on their repayments. </p>
<p>Meanwhile income taxes payable have moved higher in concert with rising taxable incomes. </p>
<p>The trend in gross disposable income is shown by the red line below.</p>
<p align="center"> <img src="https://4.bp.blogspot.com/-ew6soAsW11s/VCF5umNs6jI/AAAAAAAAP7w/d8MQCRJdCdQ/s1600/HI4.jpg"></p>
<p>So, in this sense, Commsec's observation is correct - gross disposable incomes are indeed 4.7% higher than a year ago.</p>
<p>However it is a fair bet that those who are not homeowners and are 100 percent reliant on a salary for their income do not feel much better off, if they even do at all.</p>
<p>Homeowners and in some instances those with diversified income streams are clearly benefiting very significantly from record low borrowing rates.</p>
<p>These things naturally tend to work in cycles, though - when interest rates were much higher and rising and dwelling prices easing, the boot was on the other foot entirely.</p>
<p> </p>
<p align="center"> <img src="https://3.bp.blogspot.com/-CV4uoAihbTI/VCF5tvRx9fI/AAAAAAAAP7k/dN77fz2dzgw/s1600/HI5.jpg"></p>
<p>Gross disposable income nationally has been launched massively higher by more than 80% in the past decade, unadjusted for population growth.</p>
<p>However, the trend disposable income growth per capita seems likely to slow, and if interest rates are hiked several times gross disposable income in aggregate could plateau unless wages growth rebounds.</p>
<p> <img src="https://2.bp.blogspot.com/-fXYwdyho_XE/VCF5vQP6fjI/AAAAAAAAP74/O2tfGis_r1o/s1600/HI6.jpg"></p>
<p> </p>
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Are household disposable incomes really increasing at 4.7%?

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<p><span>The Australian Bureau of Statistics (ABS) released demographic data for the December 2014 quarter yesterday. The data highlighted a continuing slowdown in the rate of national population growth, with the quarterly increase now lower than slump in population growth recorded during the GFC. In particular the mining states and territories are recording the biggest slowdown in population growth fueled by a slowdown in both interstate and overseas migration.</span></p>
<p><a href="/images/2015/06/26/Chart-13.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/06/26/Chart-13.jpg" alt=""></span></p>
<p> </p>
<p><span>The data showed that throughout 2014 Australia added another 330,202 persons.  Although this is still a relatively high rate of population growth, it is the lowest annual increase in population since the population increased by 327,637 persons over the 12 months to September 2011.  Over the final quarter of the year the national population increased by 64,010 persons which was its lowest quarterly increase since June 2006 (52,834).</span></p>
<p><a href="/images/2015/06/26/Chart-23.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/06/26/Chart-23.jpg" alt=""></span></p>
<p> </p>
<p><span>At a national level population growth is comprised of overseas migration (arrivals minus departures) and natural increase (births minus deaths), any interstate migration is neutral at a national level.  Over the past year, the country experienced a natural increase of 146,067 persons and net overseas migration of 184,135 persons.  The rate of annual natural increase is at its lowest level since December 2006 (139,793) and annual net overseas migration is at its lowest level since June 2011 (180,372).  On a quarterly basis, natural increase was recorded at 36,517 persons (its lowest level since December 2006) and net overseas migration was recorded at 46,034 persons (its lowest level since June 2011).</span></p>
<p><a href="/images/2015/06/26/Chart-33.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><img src="/images/2015/06/26/Chart-33.jpg" alt=""></p>
<p>With the national population increasing by 330,202 persons over the past year, the majority of population growth has taken place in the largest states.  NSW (31.2%) and Vic (30.7%) accounted for a combined 61.9% of national population growth.  If you add Qld (19.4%) and WA (12.1%) the four largest states accounted for 93.5% of national population growth over the year.</p>
<p>As far as the rate of population growth goes, for the first time since September 2006 WA is no longer the state with the most rapid rate of population growth with Vic taking over the mantle. Vic’s population increased by 1.8% over the year followed by: WA (1.6%), NSW and Qld (both 1.4%), ACT (1.1%), SA (0.9%), NT (0.4%) and Tas (0.3%).  Qld, WA and NT in particular are seeing the impact of the mining downturn with fewer workers required in these states as the pipeline of major infrastructure projects winds down translating into slower population growth. Two years ago these states were recording annual population growth of 2.0% in Qld, 3.7% in WA and 2.8% in NT.</p>
<p><a href="/images/2015/06/26/Chart-42.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/06/26/Chart-42.jpg" alt=""></p>
<p><span>Net overseas migration has been slowing at a national level and as the above chart shows, all states are experiencing a fall in net overseas migration.  The full brunt of the slowdown in net overseas migration is once again being felt by the resource states.  Annual net overseas migration is -30.9% lower in Qld, -47.6% lower in WA and -56.0% lower in NT.  All other states except for NSW (+1.9%) and ACT (+4.1%) have recorded a fall in net overseas migration over the year, but nowhere near the extent of the mining states and territories.  The declines in these states were recorded at -4.2% in Vic, -9.0% in SA and -2.9% in Tas.  The data also highlights that overseas migrants have a clear preference to settle in the larger states.  Over the past year, 37.9% of net migration occurred in NSW with a further 30.4% in Vic, 13.2% in Qld and 10.3% in WA.</span></p>
<p><a href="/images/2015/06/26/Chart-53.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/06/26/Chart-53.jpg" alt=""></span></p>
<p> </p>
<p>At a national level net interstate migration has no impact however, it does have a significant impact across individual states.  Over the 12 months to December 2014, there were 335,256 interstate movements across the Australian states.  Historically Qld has attracted as high number of interstate migrants however; net interstate migration to the state has slowed sharply over recent years.  Across the states, Vic now attracts the most net interstate migrants (9,336) followed by Qld (5,598) and these are the only two states that have recorded a net gain in interstate migration over the year.  Vic’s net gain from interstate migration is a record high while migration to Qld is at its lowest level on record.  The net outflow of residents from the remaining states was recorded at: -5,572 persons in NSW, -2,744 in SA, -400 in WA, -1,278 in Tas, -3,392 in NT and -1,548 in ACT.  Despite the net outflow, the net number of residents leaving NSW is at a record low.  On the other hand the loss of residents from WA is the largest since September 2003 and the outflow from NT is the largest on record.</p>
<p>In terms of natural increase the states with the largest overall populations also have the greatest natural increase.  There has been a sharp decline in natural increase in NSW over the past few years while natural increase is trending higher in WA.  The state-by-state shares of natural increase are: 26.5% in NSW, 24.8% in Vic, 23.5% in Qld, 4.9% in SA, 14.8% in WA, 1.0% in Tas, 2.0% in NT and 2.6% in ACT.</p>
<p>The demographic data highlights challenges for the Australian economy and individual states. Gross domestic product has been slowing and is much lower on a per capita basis. With population growth slowing and set to slow further in coming quarters (as foreshadowed in the monthly overseas arrivals and departures data) this poses a challenge for the national economy.  The resource states in particular are being impacted as they are attracting fewer migrants from both interstate and overseas. Conversely, NSW and Vic (which are a proxy for Sydney and Melbourne) are the places that both domestic and international migrants want to head to. </p>
<p>This in turn fuels demand for housing, creates the need for more jobs and requires more spending on infrastructure. To-date it doesn’t look as if the sharp rises in home values in Sydney and to a lesser degree Melbourne over recent years is stopping migrants heading to these areas. You would have to think that at some point this will change but no one has a crystal ball to know exactly when that inflection point will occur. Particularly given how low the cost of debt currently is with interest rates so low, furthermore rental pressures are easing given already high new housing construction and a record high pipeline of approvals to potentially follow.</p>
<p><em>Cameron Kusher is RP Data’s senior research analyst. Follow Cameron on Twitter <a href="https://twitter.com/cmkusher" target="_blank">here</a>. </em></p>
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ckusher-ujnxiKuFQs

Australia’s rate of population growth continues to slow: Cameron Kusher

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<p>Building activity data for the June 2017 quarter was published by the Australian Bureau of Statistics earlier this week. The data contains additional insight to the housing construction sector, tracking quarterly dwelling commencements, completions and counts of dwellings under construction. The data is showing a softening in commencements as approvals have slowed but still heightened levels of completions and dwellings under construction. </p>
<h3>Dwelling commencements</h3>
<p>Over the June 2017 quarter, seasonally adjusted data showed that 28,087 new houses and 24,380 new units commenced construction nationally.  The number of houses commenced was 3.3% higher over the quarter but -7.1% lower than a year earlier while unit commencements were down -0.8% over the quarter and -6.6% lower over the year.  <br> <br>Year-on-year new house commencements were lower in each state and territory, recorded at: -3.5% in NSW, -7.2% in Vic, -3.1% in Qld, -10.6% in SA, -12.2% in WA, -7.0% in Tas, -29.1% in NT and -37.9% in ACT.<br> <br>Year-on-year new unit commencements were higher in NSW (3.3%), Vic (3.2%), SA (35.0%) and Tas (153.1%) and they were lower in Qld (-30.4%), WA (-40.5%), NT (-40.9%) and ACT (-17.7%).</p>
<p>Commencements for houses picked up over the quarter but are lower across all regions over the year.  Meanwhile unit commencements are trending lower in most states and territories with notable exception of NSW, Vic and Tas.  NSW and Vic have been home to the two strongest housing markets over recent years (Sydney and Melbourne) and are seeing the largest increases in population fuelling housing demand.  Meanwhile, dwelling values in Tasmania’s largest city (Hobart) are rising at the fastest rate of any capital city while stock levels are very low so it seems a supply response is occurring.</p>
<h3>Dwelling completions</h3>
<p>Seasonally adjusted data nationally shows that over the June quarter there were 28,251 houses and 25,090 units completed nationally.  Interestingly these figures are fairly closely aligned to commencements so what was completed was effectively replaced as having started construction.  Over the quarter, new house completions were down -1.2% and new unit completions were -10.2% lower.  Year-on-year new house completions were -9.0% lower and new unit completions were down -5.2%.<br> <br>State and territory data which isn’t seasonally adjusted shows that year-on-year, new house completions rose in NSW (8.6%), Qld (18.3%) and ACT (73.3%) while completions were lower in Vic (-12.8%), SA (-3.7%), WA (-45.3%), Tas (-29.8%) and NT (-44.2%).<br> <br>New unit completions increased over the year in Vic (11.1%), Qld (13.7%) and ACT (29.6%) and were lower in NSW (-20.4%), SA (-41.6%), WA (-22.3%), Tas (-40.0%) and NT (-69.9%)</p>
<p>Completions remain at high levels however, they have eased back a little.  Given that there remains a high volume of stock under construction (as we will analyse shortly) it’s anticipated that completions are likely to remain elevated for some time.</p>
<h3>Dwellings under construction</h3>
<p>At the end of the June 2017 quarter, there were 216,242 dwellings under construction nationally.  Although the number of dwellings under construction is down from its historic high of 224,314 in September 2016, it is still at an extremely elevated level.  As a comparison, the long-term average number of dwellings under construction at the end of a quarter is 106,774 and even over the past 10 years the average has been recorded at 153,545.  In June 2017, there were 62,409 new houses and 151,510 new units under construction nationally.  Again, both are well above the long-run averages of 48,329 and 38,964 respectively.<br> <br>Looking at the data across the states, at the end of the quarter the number of new houses under construction was recorded at: 17,845 in NSW, 21,401 in Vic, 8,605 in Qld, 4,726 in SA, 7,669 in WA, 1,227 in Tas, 276 in NT and 660 in ACT.  By comparison, the long-term average number of houses under construction across the states is recorded at: 13,566 in NSW, 15,186 in Vic, 7,250 in Qld, 3,681 in SA, 7,455 in WA, 1,548 in Tas, 544 in NT and 938 in ACT.  All states and territories except for Tas, NT and ACT currently have more new houses under construction than the long-term average.<br> <br>The number of new units under construction is where there is generally a substantial deviation from the long-term average.  Across the states, at the end of the June 2017 quarter the number of new units under construction was recorded at: 64,470 in NSW, 43,240 in Vic, 27,420 in Qld, 4,230 in SA, 6,360 in WA, 391 in Tas, 495 in NT and 4,904 in ACT.  Tas is the only state or territory with fewer new units currently under construction than its long-term average which is recorded at 431.  Across the remaining states, the long term average number of new units under construction is: 17,162 in NSW, 10,854 in Vic, 7,897 in Qld, 1,955 in SA, 3,382 in WA, 445 in NT and 1,235 in ACT.  The current number of new units under construction in NSW (+276%), Vic (+298%), Qld (+247%), SA (+116%) and ACT (+297%) is well in excess of double the long-term average.</p>
<p>The volume of new housing stock under construction remains at dizzying heights, albeit not quite as high as a few quarters ago.  The surge in stock under construction is being driven by units which by nature take longer to build and deliver more stock in a single project than houses. Interestingly, the number of units under construction has slowed in Vic and Qld but continues to climb in NSW.  This is probably to do with the fact that many property purchasers in NSW can simply no longer afford houses (particularly in Sydney) so units become their only housing purchase option. </p>
<h3>Conclusion</h3>
<p>Although dwelling approvals have eased from their record high levels, over recent months they have been fairly steady.  They seem to have settled at a level which is well above long-term average levels.  While this means that commencements won’t be as strong going forward they are likely to remain high relative to historic levels.  There is a significant number of new dwellings (particularly units) under construction which means that completions are likely to remain elevated for some time. Once they do fall we would expect them to stabilise at a level well above the long-term average.  With the national population increasing rapidly, these people need to be housed so although housing construction is unlikely to remain as strong as it has been recently, we do expect that a substantial volume of housing construction is likely to continue to take place.</p>
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