Building Activity

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<p>New Home Sales were 39.4 per cent higher in the March 2021 quarter than the same time the previous year.</p>

<p>The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.</p>

<p>“HomeBuilder, combined with low interest rates, changing population dynamics and improving market confidence, led to strong sales through to the end of 2020,” stated HIA’s Economist, Angela Lillicrap.</p>

<p>“In December 2020, there was a near record volume of new home sales as households rushed to finalise contracts to build a new home before the end of the $25,000 grant."</p>

<p>“This same effect can be seen in March as households rushed to get access to the $15,000 grant."</p>

<p>[smartcode_project:default project_id=4807]</p>

<p>Over the year to March 2021, sales increased by 42.6 per cent compared to the previous year. This indicates a strong level of building activity will occur in 2021 and into 2022, providing employment to the construction sector and supporting the broader economy.</p>

<p>HomeBuilder has brought forward demand for new homes. As a consequence, sales over the coming months are expected to cool from recent highs.</p>

<p>“Demographic shifts in population towards regional areas will continue to drive demand for new detached homes. Strong house price growth recently has also sparked FOMO in buyers which will also support the industry,” concluded Ms Lillicrap.</p>

<p>Sales in the March 2021 quarter increased across all the five largest jurisdictions compared to the same time the previous year. South Australia was up by 90.6 per cent, followed by Queensland (+54.9 per cent) and Victoria (+41.9 per cent). New South Wales increased by 24.7 per cent and Western Australia is up by 15.2 per cent over the same period.</p>
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New Home Sales were 39.4 per cent higher in the March 2021 quarter than the same time the previous year.

jordan_55689

New home sales spike during March

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<p>GUEST OBSERVER</p>
<p>The ABS quarterly survey “Building Activity” provides detail on the non-residential building sector. Here we reassess conditions and prospects for the sector.</p>
<p>Hereafter ‘building’ refers to ‘non-residential building’.</p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.52.08%20PM.png" target="_blank">Click to enlarge</a><br><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.52.08%20PM.png" alt=""></p>
<p>In summary, private building activity weakened over the first half of 2016, puncturing a five year upswing. Our assessment remains that the near-term decline in private activity will be relatively modest, a view supported by the recent improvement in approvals and commencements.</p>
<p>By contrast, total building activity (which includes public works) is likely to be resilient. Notably, the public sector has loosened the purse strings, committing to much needed social infrastructure. Public building approvals and commencements have lifted sharply from their lows.</p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.54.02%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.54.02%20PM.png" alt=""></p>
<p>State by state, conditions are varied and more nuanced than a mining / non-mining divide, as discussed below.</p>
<p>Activity: Real private building activity has weakened in 2016, falling by 4.2% in Q1, followed by a flat Q2. That follows a 31% expansion in the five years to end 2015, including a 7.8% increase in 2015. The level of activity in the Q4 2015 was 4.6% above the previous peak of end 2008, ahead of the GFC impacts.</p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.56.13%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.56.13%20PM.png" alt=""></p>
<p>Public works in 2016 are in the beginnings of an upswing. Activity rebounded by 6.1% in Q1 and rose a further 11.9% in Q2. Prior to this, activity declined through 2011 to 2015, unwinding the 2009 fiscal stimulus package.</p>
<p>Total real building work was flat over the first half of 2016, with a 2.2% fall in March reversed by a 2.4% June, to be broadly unchanged from a year ago (+0.6%).</p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.57.56%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.57.56%20PM.png" alt=""></p>
<p>Total commencements strengthened in 2015/16, increasing by 14% to $33.6bn, a rise of $4.1bn, largely reversing the 16% decline in 2014/15. In the June quarter, commencements were $8.5bn, in line with the annual pace.</p>
<p>The public sector led the way in 2015/16, with commencements up 41% to $8.8bn, (+$2.6bn), with rebounds in health, education and strength in social buildings more generally. This has public commencements at their highest level since 2011/12.</p>
<p>Private commencements also rose in 2015/16, +7%, following a 16% fall the year prior, centred on: retail; entertainment &amp;recreation; and accommodation.</p>
<p>The pipeline of work outstanding peaked at a relatively high level in mid-2014, at $27bn in total ($21bn for the private sector). The pipeline was progressively reduced, moderating to $19bn by the end of 2015 ($14bn private). Over the past half year, the overall pipeline of work stabilised, edging up to $20bn, while that for private projects edged lower, down to $13bn. </p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.59.05%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%201.59.05%20PM.png" alt=""></p>
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<p><span>Commencements and approvals </span></p>
<p><span>Private sector commencements were valued at $24.9bn in 2015/16, an increase of 7% on the year prior, +$1.6bn, partially reversing the 16% decline in 2014/15. The rebound was centred on: retail, +$0.9bn; entertainment &amp; recreation, +$0.7bn; and accommodation, $0.6bn.</span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.01.06%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.01.06%20PM.png" alt=""></span></p>
<p> </p>
<p><span>Private commercial building commencements (centred on retail and offices) have improved following a sharp fall in 2014/15.<br> In 2015/16, commencements for the segment were valued at $11.0bn, +10% on the year before. That is below the 2013/14 outcome of $13.0bn and the earlier peak of $15.7bn in 2007/08. </span></p>
<p><span>For retail, while consumer spending has been lacklustre at the national level, commencements are elevated supported by increased competition. In the office segment, commencements have stabilised at a low level, +6% in 2015/16, after falling sharply in 2014/15, down 39%. The outlook for offices is heavily influenced by the mining / non-mining growth divide.</span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.03.48%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.03.48%20PM.png" alt=""></span></p>
<p> </p>
<p><span>An area of strength is ‘social infrastructure’. Within this segment upswings are evident in accommodation (including hotels and student apartments) and aged care facilities, as well as strength in entertainment &amp; recreation, and a rebound in education. In 2015/16, commencements for social infrastructure rebounded by 9%, to $9.8bn, only 5% below the historic high of 2013/14 and up from $5.8bn in 2007/08. The segment now accounts for 40% of total private commencements. </span></p>
<p><span>The more timely building approvals data, which is available to August, confirm that we are likely past the low point in this cycle. </span></p>
<p><span>Private building approvals for the 12 months to August are 3% above those for the year before, reflecting gains in social infrastructure, +8%, and industrial, +17%. However, private building approvals remain 10% below the recent peak, which was for the year to February 2014.</span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.05.01%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.05.01%20PM.png" alt=""></span></p>
<p> </p>
<p><span>State-by-state </span></p>
<p><span>Building conditions across the states are quite varied and the outlook is more divergent than is implied by a simple mining / non-mining growth divide. </span></p>
<p><span>As at the national level, the importance of social infrastructure projects, a lift in public investment, and resilience in the retail sector add nuances to the state-by-state picture.</span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.06.31%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.06.31%20PM.png" alt=""></span></p>
<p> </p>
<p><span>The value of building work nationally grew by 2.3% over the year to the June quarter 2016, +$0.2bn (although in real terms, work was broadly flat, up 0.6%). By state, the value of building work made solid gains in NSW and Qld, as well as Tasmania, with largely offsetting falls in Victoria, WA and South Australia. </span></p>
<p><span>Commencements strengthened in 2015/16, up $4.2bn nationally, a move that was centred on gains in Qld , as well as a strengthening of public works in the smaller states.</span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.08.03%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.08.03%20PM.png" alt=""></span></p>
<p> </p>
<p><span>In Qld, commencements rebounded partially in 2015/16, up $1.9bn, following a sharp fall in 2014/15. It was private social infrastructure, as well as public works, that led Qld commencements higher in 2015/16, including: accommodation, aged care facilities, education, and entertainment &amp; recreation. </span></p>
<p><span>Public building commencements in the smaller states and in the territories jumped to $2.7bn in 2015/16, up $1.6bn on 2014/15. A partial rebound in NSW public commencements, +$0.7bn, was another mover in 2015/16. </span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.09.10%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
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<p><span>On a state by state basis, current conditions and the near-term building outlook are, in summary: </span></p>
<p><span>In NSW: real building work grew by 7% over the past year. This lift in activity was supported by reducing what was a sizeable pipeline of work outstanding. Near-term, the value of activity is vulnerable to a pull-back from current elevated levels, which are around 20% above commencements. Beyond that, the outlook is positive, reflecting the sound fundamentals for the state and expansionary state fiscal policy. </span></p>
<p><span>In Victoria: real building work declined by 6% over the past year, partially reversing the upswing of the previous couple of years. An emerging stabilisation in activity is likely in coming quarters, ahead of an improvement, supported by the recent strengthening of commencements and approvals, and underpinned by positive fundamentals. </span></p>
<p><span>In Qld: real building work rebounded over the past year, up 12%, following the softer tone evident since 2011 which was associated with the winding down of the mining investment boom. As noted above, commencements bounced back in 2015/16, up on private social infrastructure and public works. The modest lift in the work pipeline will be supportive of activity near-term. Further out, key will be whether some sizeable tourism projects receive the go ahead in response to rising demand, including from international visitors. </span></p>
<p><span>In WA: real building work trended lower over the past year, down 7%, extending the downturn which emerged from the start of 2012 associated with the turning of the mining investment cycle. Conditions are likely to remain subdued as the state continues to feel the impacts from the mining investment downturn, notwithstanding stronger commencements in the June quarter, centred on retail.</span></p>
<p><a href="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.10.27%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2016/10/31/Screen%20Shot%202016-10-31%20at%202.10.27%20PM.png" alt=""></span></p>
<p> </p>
<p><span>In South Australia: building work weakened over the past two years, including a 9% fall in the year to June 2016, as work on the Royal Adelaide Hospital was progressively completed. Conditions are set to turnaround in coming quarters, led by the public sector, with work progressing on the $0.23bn University of South Australia’s Health Innovation centre and the $0.2bn Adelaide University Medical and Nursing school. </span></p>
<p><span>In Tasmania: building work has begun to recover, led by the public sector. This follows four years of subdued conditions which emerged after the impacts of the Federal government’s fiscal stimulus package of 2009/10. The value of building work for the 2015/16 financial year as a whole was 14% above the level of the year prior. There is further upside, supported by the now relatively sizeable work pipeline, which stands at $0.68bn currently, up from around $0.25bn a year earlier. The $0.7bn Royal Hobart hospital redevelopment is the largest project under construction and work on this has a good deal to run. </span></p>
<p><span><em>Andrew Hanlan is senior economist for Westpac and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/andrew-hanlan/3/222/430" target="_blank">here</a>. </em></span></p>
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jchancellor-FAypfDUnLy

Private building activity weakened over first half of 2016: Westpac's Andrew Hanlan

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<div>Building activity is one of the more complicated data series released by the ABS, so I'll just post the headline figures here. </div>
<div> </div>
<div>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. </div>
<div> </div>
<div>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. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/13/A3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/A3.jpg" alt=""></div>
<div> </div>
<div>Nationally dwelling commencements remained strong in the fourth quarter of 2016 at more than 57,000 in seasonally adjusted terms.</div>
<div> </div>
<div>But in reality the red hot run is now only being held aloft by Sydney, with commencements declining in Melbourne, Brisbane, and Perth. </div>
<div> </div>
<div>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.</div>
<div> </div>
<div>Commencements have been falling in Western Australia for nine consecutive quarters.</div>
<div> </div>
<div>Plotting the figures in trend terms shows how the residential boom is really just a Sydney story now. </div>
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<p><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">Supply coming online</span></strong></p>
<div>At the end of 2016 there were still some 219,384 dwellings under construction, including 152,635 attached dwellings.</div>
<div> </div>
<div>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. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/13/A1.jpg" target="_blank">Click to enlarge</a></p>
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<div>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.</div>
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<div>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). </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>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.</div>
<div> </div>
<div>There was also an unprecedented number of education arrivals in 2016, which may be a coincidence or driven by the lower dollar. </div>
<div> </div>
<div>On the other hand, maybe the government has quietly turned on the immigration taps.</div>
<div> </div>
<div>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.   </div>
<div> </div>
<div>Let's hope the new arrivals like egg boxes. </div>
<div> </div>
<div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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pwargent-M4siyDbqQY

Let's hope the new arrivals like egg boxes: Pete Wargent

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<p>Construction activity picked up over the quarter ended March 2016 from the same period last year, according to the latest Construction Market Movement Report (Q12016) from Cordell, which gives an overview of the health of the Australian construction industry. </p>
<p>According to Cordell, which last year became a CoreLogic business, the report delivers a comprehensive overview of construction projects identified within Australia over the last 24 months across civil engineering, apartments and units, commercial, industrial, mining and community. </p>
<p>For the March 2016 quarter, 4,302 projects entering the construction phase in comparison to 3,931 for the same time last year.</p>
<p>Pipeline activity is also up with 4,830 projects reported in March 2016, up from 4,597 for the same period last year with apartments and units the most active sector. There was $50 billion in pipeline activity compared to $27 billion for the same period last year.</p>
<p>However, deferrals rose with 411 projects put on hold compared to 375 for the same time last year. The value of deferred projects this quarter is $3.6 billion compared to $3.1 billion for the same time last year.</p>
<p>Abandonments too increased with 359 projects stopped for March 2016 compared to 320 previously. The value of abandonments is $1.2 billion this quarter which is unchanged from the previous year. </p>
<p>Commenting on the Cordell report, CoreLogic spokesperson Greg Dickason said the overall results to the March 2016 quarter were positive with civil engineering projects in roads and infrastructure leading the way.</p>
<p>“While general pipeline activity is encouraging with 4,830 projects underway valued at around $50 billion, and largely dominated by apartments and unit developments, deferrals increased. Four hundred and eleven construction projects were placed on hold over the quarter compared to 375 in the March 2015 quarter. In addition, three hundred and seventy five projects were confirmed as abandoned in the March 2016 quarter compared to 320 for the March 2015 quarter,” Dickason said.</p>
<p><a href="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%2011.44.00%20AM.png" target="_blank"><span style="font-size: 12.16px; line-height: 1.3em;"> Click to enlarge</span></a></p>
<p><img src="/images/2016/05/18/Screen%20Shot%202016-05-19%20at%2011.44.00%20AM.png" alt="" width="874" height="852"></p>
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prateek24-ezbwHMbNAk

Construction pipeline rose in Q1 of 2016, shows Cordell report

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<p>Building activity will bottom out in 2019 with activity still at solid levels according to the winter edition of the HIA’s National Outlook Report.</p>
<p>Tim Reardon, HIA’s principal economist said the housing sector has already stepped back from its role driving the Australian economy and now is not the time for governments to hit the industry with punitive charges.</p>
<p>“Government interventions into the market so far include: state governments imposing punitive Stamp Duty charges on foreign investors, Federal charges for foreign investors, a new set of visa rules that could slow overseas migration, restricting lending to domestic investors and new regulations limiting interest only lending. </p>
<p>“The Chinese government has also imposed restrictions on capital leaving the country which may have a significant impact on Australian home building. </p>
<p>“Foreign investors have been attracted to the Australian housing market and they have been investing billions annually in the construction of new residential dwellings. </p>
<p>“These investors have contributed to activity and employment in metropolitan areas building the supply of new housing stock and easing pressure on rental markets. </p>
<p>“Governments of all jurisdictions should proceed with caution when imposing new punitive measures on this segment of the market. </p>
<p>“Foreign capital is highly mobile and if it is forced from the market rapidly it could accelerate the downturn in the sector unnecessarily. </p>
<p>“A number of state governments have recently hit foreign investors with punitive charges. </p>
<p>“The Australian Government has also imposed additional regulations that will impact on investors in the sector. </p>
<p>“The HIA is forecasting that building activity will decline modestly – from record highs - over a number of years, consistent with typical cyclical trends in the industry. Activity will bottom out in 2019 with activity still at solid levels. </p>
<p>“There is a risk - if uncoordinated and poorly considered policies are introduced to curb foreign investment - that the decline in activity in the sector will be accelerated,” Mr Reardon concluded. </p>
<p><span>The winter </span><span>2017 edition of the </span><span>HIA’s </span><span>National Outlook </span><span>Report discusses the downturn in building activity beginning March 2016 and forecasts the length and depth of the cycle.</span></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/08/24/Screen%20Shot%202017-08-24%20at%2011.46.26%20AM.png" target="_blank"><span> Click to enlarge</span></a></p>
<p><span><img src="https://www.urban.com.au/images/2017/08/24/Screen%20Shot%202017-08-24%20at%2011.46.26%20AM.png" alt=""></span></p>
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jonathanchancellor-7SQnKwU6yx

Building activity predicted to bottom out in 2019: HIA

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<p>EXPERT OBSERVER </p>
<p>The number of dwelling starts (commencements) fell by 16.3 per cent in the December quarter to 46,706 dwellings after falling by 3.8 per cent in the September quarter. </p>
<p>House starts fell by 7.6 per cent in the December quarter and apartment starts fell by 26.8 per cent. </p>
<p>Work started on 221,606 new dwellings over the 12 months to December, up 2.4 per cent on the year, but fell from the record high of 234,179 dwellings in the year to December 2016. </p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CMSC%201.JPG" alt=""></p>
<p>Across Australia, starts in the December quarter fell in seven states/territories: NSW (down by 15.6 per cent); Victoria (down by 10.5 per cent); Queensland (down by 29.7 per cent); South Australia (down by 4.5 per cent); Western Australia (up by 14.9 per cent); Tasmania (up by 3.9 per cent); Northern Territory (down by 24.6 per cent); and the ACT (down by 53.1 per cent).</p>
<p>In the year to December, dwelling starts were higher than the decade average in all of the states &amp; territories except for the Northern Territory (down 53.9 per cent), and Western Australia (down 30.8 per cent). Starts in NSW were 43.2 per cent above the decade average. Next highest was the ACT where starts were up by 42.7 above the decade average with Victoria up 22.5 per cent; Queensland up 12.4 per cent; Tasmania up 12.0 per cent; and South Australia up 8.5 per cent. \</p>
<p>In the December quarter $72.9 billion of residential and commercial building work was yet to be done (completed), up 5.6 per cent on a year ago. </p>
<p>The value of residential and commercial building work in the pipeline stood at $94.9 billion at the end of December, down by 0.7 per cent on a year ago but down from a record $99 billion at the end of June.</p>
<p>Across Australia, 216,948 homes are being built, down from a record 230,573 homes in March.</p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CMSC%203.JPG" alt=""></p>
<p><strong>Consumer confidence</strong> </p>
<p>The Westpac/Melbourne Institute survey of consumer sentiment index rose by 1.9 per cent to 100.7 in April. But the sentiment index is below its long-term average of 101.3 and down 1.7 per cent over the year to April. A reading above 100 denotes optimism. The survey of 1,200 people was conducted from April 1-5. </p>
<p>The current conditions index fell by 3.2 per cent, but the expectations index rose by 5.4 per cent. </p>
<p>Three of the five components of the index rose in April: </p>
<p>The estimate of family finances compared with a year ago fell by 5.0 per cent to 80.2;</p>
<p>The estimate of family finances over the next year rose by 4.1 per cent to 105.6;</p>
<p>Economic conditions over the next 12 months rose by 6.2 per cent to 101.8; </p>
<p>Economic conditions over the next 5 years rose by 5.9 per cent to 100.2;</p>
<p>The measure on whether it was a good time to buy a major household item fell by 2.0 per cent to 115.5. </p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CMSC%202.JPG" alt=""></p>
<p>Housing outlook: A good time to buy a dwelling? The index rose by 2.4 per cent to 119.4, and was up 14.9 per cent on the year. House price expectations rose by 11.9 per cent to 95.6, but were down by 26.5 per cent on a year ago. </p>
<p>Unemployment expectations: Unemployment expectations fell by 2.5 per cent to 127.4 in April to be up by just 1.4 per cent over the year.</p>
<p><strong>What are the implications for interest rates and investors?</strong> </p>
<p>Council approvals to build new homes may have eased from record levels, but there is still plenty of work to be done over the next year. Dwelling starts in ‘boom’ state of Tasmania are particularly strong. At the other end of the spectrum, building in the ‘Top End’ is at record lows due to weak population growth. </p>
<p>And it’s not all ‘doom and gloom’ for building materials’ companies. In fact, the growing pipeline of public transport-related infrastructure projects could ‘fill the gap’ for residential builders, while boosting demand for building products. If re-elected, the Federal government has committed to $100 billion worth of rail, roads and other transport projects over a 10-year period. </p>
<p>Consumer spending and the jobs market are both key to the interest rate outlook. Spending at supermarkets and on food have both been solid. As the Easter holidays approach, retailers will be hoping that Aussies feel chipper about their tax cuts. That said, it appears the reaction from low income earners has been fairly muted.</p>
<p>CommSec expects interest rates to be unchanged for the foreseeable future. But the loss of momentum across global economies means central banks are skewed to more accommodative monetary policies.</p>
<p><em><span>RYAN FELSMAN is a Senior Economist for CommSec</span></em></p>
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Home building hits three year low: CommSec's Ryan Felsman

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<p>EXPERT OBSERVATION</p>
<p>Access to finance continues to constrain lending for the purchase of a new home.</p>
<p>The ABS has released Lending to Households and Businesses for February 2019. This publication presents statistics on housing finance commitments including for the purchase or construction of new dwellings.</p>
<p>Overall housing finance commitments for construction and purchase of new homes are now 14.1 per cent lower than they were in February 2018.</p>
<p>Despite the trend of the last year lending to households rose by 2.6 per cent in the month of February.</p>
<p>This increase is consistent with the small rise we saw in new home sales in February.</p>
<p>After five years of a sustained building boom, market confidence fell away in the later part of 2018 as dwelling prices corrected, adversely impacting all segments of the market.</p>
<p>Investors and owner occupiers are delaying purchase decisions and foreign investment has also fallen dramatically for numerous reasons.</p>
<p>Our expectation is that the credit squeeze will ease over the course of 2019 and we are hopeful that this is an early sign that the fall in lending will be modest by historical standards.</p>
<p>Click <a href="https://www.propertyobserver.com.au/images/2019/4/11/HIA%20Graph.JPG" target="_blank">here</a> to enlarge.</p>
<p><em><img src="https://www.urban.com.au/images/2019/4/11/HIA%20Graph.JPG" alt=""></em></p>
<p>The pipeline of building work which had expanded over recent years has shrunk over the past 6 months as the volume of work entering the pipeline fell away.</p>
<p>The home building industry has driven economic growth in Australia since the end of the resources boom. As the housing boom cools the industry will be reliant on a strong national economy to ensure that this is a relatively shallow downturn.</p>
<p>Lending to owner-occupiers building and purchasing new homes in the three months to February 2019 compared with the previous quarter were down in all states.</p>
<p>NSW down by 21.0 per cent, Victoria down by 17.6 per cent, Queensland down by 20.5 per cent, South Australia down by 10.8 per cent, Western Australia down by 17.8 per cent and Tasmania down by 17.0 per cent.</p>
<p><em>TIM REARDON is the Chief Economist of HIA</em></p>
<p> </p>
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