Housing Construction

<html><body>
<p>According to the Australian Bureau of Statistics (ABS) November 2016 building approvals data there were 17,569 houses and units approved for construction across the country over the month. </p>
<p>Based on the seasonally adjusted series, the number of dwelling approvals rose by 7.0 percent over the month due to a substantial rebound in unit approvals.  Despite an increase in approvals in November, they are -4.8 percent lower over the year and are -18.6 percent lower than their peak in October 2015 when 21,588 houses and units were approved.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-1.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/01/09/chart-1.jpg" alt=""></p>
<p>In November 2016 there were 9,503 houses and 8,066 units approved for construction throughout the country. Over the month, house approvals fell by -0.4 percent while unit approvals increased 17.3 percent. </p>
<p>Unit approvals tend to be lumpy and volatile, which goes a long way towards explaining the 17.3 percent increase in November following a -20.1 percent decline in September and -22.8 percent fall in October of last year. Year-on-year, houses approved for construction were -2.1 percent lower and unit approvals were down -7.8 percent. </p>
<p>Over the current construction cycle, house approvals peaked at 10,649 in April 2015 and unit approvals peaked at 11,763 over the month of October 2015.  November 2016 house approvals were -10.8 percent lower than the April 2015 peak while unit appears have fallen more dramatically, down -31.4 percent from their October 2015 peak.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-2.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/01/09/chart-2.jpg" alt=""></p>
<p>Looking deeper into unit approvals by type, it becomes clear that the surge in new high-rise construction projects has slowed.  This data is split into three segments: townhouses, low-rise units (less than four storeys) and high-rise units (four storeys or higher). </p>
<p>The above chart highlights the volatility in unit approvals and also shows that the recent plunge of unit approvals is being driven by the high-rise unit sector. With ongoing concerns about oversupply of high-rise units in certain inner city markets and slowing value growth for units, it seems that developers are responding by seeking fewer new high-rise unit approvals. Another interesting trend over the past year or so has been the steady upwards trend in townhouse approvals. The substantial increase in high-rise approvals over recent years has occurred at the expense of townhouse and low rise approvals. </p>
<p>With the expected further slowing of high-rise unit approvals there is potential for a lift in townhouse approvals over the coming year.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-3.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/01/09/chart-3.jpg" alt=""></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-4.jpg" target="_blank">Click to enlarge</a></p>
<p><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/2017/01/09/chart-4.jpg" alt=""></p>
<p>The two above charts show the proportion of dwelling approvals that were for units.  The data points to the fact that in most capital cities developers have recently slowed their submissions for unit building approvals. As a proportion of all approvals there have been some significant declines in unit approvals in Melbourne, Brisbane, Perth, Hobart and Darwin over the past six months.</p>
<p>The reality is that this is an appropriate response in most of these cities given how much unit construction has been taking place.</p>
<p>Hobart is the one exception where it could be argued that more unit construction is required, particularly given the booming tourism sector.  Sydney and Canberra have recorded no significant slowdown in unit approvals as a proportion of total approvals over recent months.  Sydney has been approving more units than houses for more than two decades where in most other capital cities the dominance of unit approvals over those for houses is a relatively new phenomena.</p>
<p>Unit approvals are trending lower, particularly for high-rise units, which is an appropriate response so late in the current construction phase. The reality is that at least initially, an increasing proportion of these units approved for construction may not be sold. There remains a substantial pipeline of construction work already underway which should keep residential builders busy for some time. </p>
<p>Should, as we expect, approvals soften further and remain well below their recent heights over the coming years absent a pick-up in non-residential or infrastructure construction, there could be some headwinds for builders and associated businesses. </p>
<p>Housing construction has been a significant driver of economic growth over recent years and a slowdown in this sector could also impact on economic growth over the coming years unless some other large industry segment can pick up the slack. <span> </span></p>
<p><em>Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
<div class="sharedaddy sd-sharing-enabled">
<div class="robots-nocontent sd-block sd-social sd-social-icon-text sd-sharing">
<h3 class="sd-title"> </h3>
</div>
</div>
</body></html>

ckusher-ujnxiKuFQs

Dwelling approvals bounce in November but don’t expect it to continue: Cameron Kusher

<html><body>
<p><span>This week, I came across a couple of quotes that really resonated with me. They were both around giving. </span></p>
<p><span>It's funny but developing property in a way can be very 'taking'. What I mean by this is that you are always trying to get something more like a better deal or cheaper cost, a faster timeframe or a better sale price or rent.</span></p>
<p><span>But I've found over the years, if you give first then it becomes a far more enjoyable journey.</span></p>
<p><span>The first quote is from Robert Kiyosaki, the famous author of Rich Dad, Poor Dad. I read this book 15 years ago and it changed my life.</span></p>
<p><span><strong>"Teach and you shall receive."</strong></span></p>
<p><span>I think he's used a twist on a well known biblical quote 'Ask and you shall receive'. Maybe he was thinking along the lines of teaching so they didn't have to ask?  </span></p>
<p><span>Teaching someone is giving them the gift of your knowledge and experience and it's one of the many tips that Kiyosaki shares throughout the book. His words are eloquent concerning this idea: “There are powers in this world that are much smarter than we are. You can get there on your own, but it’s easier with the help of the powers that be. All you need to be is generous with what you have, and the powers will be generous with you.”</span></p>
<p><span>I call these "powers that be" the Universe and for me it is a powerful thing.</span></p>
<p><span>The other quote I liked is from Mike Dooley, author and entrepreneur - <strong>"Every time you give, whether it's your time, your compassion or your financial abundance, you're saying 'I am provided for'."</strong></span></p>
<p><span>He's talking about leveraging the Universe and he says giving is powerful because it's a physical act that can demonstrate you know you're ok and that you have enough and it's this sentiment or perhaps energy that manifests for you.</span></p>
<p><span>Giving is such a simple thing we can all include in our everyday lives. It can be the smallest gift of a compliment that may make someone's moment a bit brighter.</span></p>
<p><span>Relating this back to property development, I do try to incorporate giving into our business. We hope what we give to our clients - time, knowledge and experience meets a number of their needs and helps them move towards financial freedom. Our clients pay us for our service but it's the extra thing - education - that we incorporate into this service in the hope they'll be able to use it sometime in the future.</span></p>
<p><span>I also hope by writing each week that I'm sharing something with those who read my stories. When I sit down and wonder what I'm going to write about today, I always try and make it come from my heart as well as my head and hope the information may help someone with what they are trying to achieve. </span></p>
<p><span> </span></p>
<p><em>Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.</em></p>
</body></html>

jochivers-wq5Bp59R5a

Teach and you shall give: Jo Chivers

<html><body>
<p><span>The Australian Bureau of Statistics (ABS) published building approvals data for August 2015 earlier this week.  The data showed a month-on-month fall in approvals driven by a sharp drop in the number of unit approvals.  Keep in mind that unit approvals tend to be much more volatile than house approvals on a monthly basis.</span></p>
<p><a href="/images/2015/10/06/Chart-1.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/06/Chart-1.jpg" alt=""></span></p>
<p><span>Over the month there were 18,071 dwelling approvals which was a decline of -6.9% over the month.  Dwelling approvals hit a record high of 20,215 approvals in March 2015 and they are now -7.5% lower.  It does appear that approvals have peaked notwithstanding the fact that they remain at historically high levels.</span></p>
<p><a href="/images/2015/10/06/Chart-2.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/10/06/Chart-2.jpg" alt=""></span></p>
<p>There were 9,882 houses and 8,819 units approved for construction in August 2015.  House approvals actually increased by 4.4% over the month while unit approvals fell by -16.9%.  Year-on-year house approvals have increased by 2.2% compared to an 8.4% lift in unit approvals.  To further highlight the volatility of unit approvals the 8.4% year-on-year increase in August is well down on the 44.2% year-on-year rise in July.  Although it looks as if approvals have peaked it would not surprise to see a sharp rebound in unit approvals next month.</p>
<p>Across the country there was a record high 226,415 dwellings approved for construction over the 12 months to August 2015.  To put the magnitude of approvals in perspective, two years ago over the year to August 2013 there had been 166,658 dwelling approvals nationally.  There has also been a surge in unit approvals over recent years with a record high 48.8% of all dwelling approvals nationally being for units over the past year.  Again, 2 years ago units accounted for 42.5% of all approvals over the year.</p>
<p><a href="/images/2015/10/06/Chart-3.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/10/06/Chart-3.jpg" alt=""></p>
<p>It isn’t just the fact that more units are being built, the type of units being constructed is changing dramatically.  Over the 12 months to August 2015, 25.7% of all unit approvals were for townhouses, 10.1% were low rise (less than 4 storeys) and 64.3% were high-rise (4 storeys or more).  The above chart shows that historically townhouses have received the highest proportion of approvals.  Trends have changed quite swiftly, 2 years ago just 49.2% of all unit approvals were high-rise.  The rise in high-rise approvals is reflective of higher densities within our inner city markets.  High rise unit projects also take longer to build than a house or townhouse and as a result the economic benefit is stretched over a longer period.  Of course the fact that we are approving high-rise units at an unprecedented pace also creates some challenges.  Most notably who are buying these properties and over the longer term who is going to live in these units.</p>
<p>The data indicates that dwelling approvals have probably peaked for the current phase however, the number of approvals remains elevated.  This has created a significant pipeline of new construction much of which is high-rise and will take some time to complete.  Because unit development is so dependent upon presales it will be interesting to see just how many of these units are ultimately built.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
<p><span> </span></p>
</body></html>

Dwelling approvals remain elevated but fall in August: Cameron Kusher 

<html><body>
<div>
<span style="line-height: 1.3em;">In the past week the ABS released its </span><span style="line-height: 1.3em;">Construction Activity</span><span style="line-height: 1.3em;"> figures for the June 2015 quarter, which pull together data on building and engineering construction.</span>
</div>
<div> </div>
<div>As you can see below total construction surprised in jumping back up by a seasonally adjusted +1.8% in Q2 to sit above $50 billion in chain volume measures terms.</div>
<div> </div>
<div>The rebound was driven by a surge in engineering construction (see the blue shaded area in the graphic below), which rose by +5.7% in the quarter, although with fewer large projects in the pipeline this sector will soon enough resume its inevitable decline over the next couple of years. </div>
<div> </div>
<div>Given the sheer size of the engineering construction sector at $26.7 billion of work done in the June quarter, the downturn is will continue to act as a material drag on economic growth for quite some time.</div>
<div> </div>
<div>The red shaded area below shows that residential building work declined in the June quarter by -2.9% to $14.7 billion, despite still being up by +7.6% over the year. </div>
<div> </div>
<div>Non-residential building, denoted by the yellow shaded area below, has not really contributed a great deal to growth, having actually declined by -1.2% over the past year. </div>
<div> </div>
<div><a href="/images/2015/10/19/CONS1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/10/19/CONS1.jpg" alt=""></div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">Apartment approvals to decline</span></strong></div>
<div> </div>
<div>While there is still a high volume of residential building approvals in the pipeline - which is expected to see housing starts remain strong across the next financial year - it appears that the peak in construction activity may be in for the cycle.</div>
<div> </div>
<div>Although defaults relating to apartment pre-sales have been low to date and indicators of household financial stress benign, developers will be increasingly reticent to lend against high density projects in certain inner city areas, particularly in Melbourne and Brisbane.</div>
<div> </div>
<div>If you take a walk around Fortitude Valley/Newstead (see my photos <a href="https://petewargent.blogspot.co.uk/2015/08/cranewatch-newstead" target="_blank">here</a> for an idea of what I'm referring to), or West End/South Brisbane (see my photos <a href="https://petewargent.blogspot.co.uk/2015/02/brisbane-apartments-part-deux" target="_blank">here</a> for more of the same) it is not hard to see why, with building approvals as a percentage of existing dwelling stock already tracking at an elevated level.<br><br>Brisbane CBD faces similar challenges as I looked at with some photos <a href="https://petewargent.blogspot.com.au/2015/01/brisbane-apartments" target="_blank">here</a>, as does Melbourne in certain inner city locations.</div>
<div> </div>
<div>The is a glut of apartment building coming online in these areas which will see vacancy rates rise and rents fall, and it follows there is no requirement for further apartment approvals.</div>
<div> </div>
<div>Indeed, we already know that DA lodgements in Brisbane began to fall quite sharply earlier in the year. </div>
<div> </div>
<div>This is one of the risks identified by the <a href="https://www.rba.gov.au/publications/fsr/2015/oct/html/contents" target="_blank">Reserve Bank</a> of a property cycle which is driven largely by investors - speculative demand can lead to a sharp supply response. </div>
<div> </div>
<div>In this case it comes in the guise of rapid increase in construction activity in the apartment sector, and in turn a future supply overhang.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Implications</span></strong></div>
<div> </div>
<div>While work in the pipeline should keep residential building activity humming along at a historically high level - and a boom in major renovations work could even see total residential activity rise a little from here - there appears to be little hope that the sector can contribute a great deal more to economic growth than it already has.</div>
<div> </div>
<div>Since engineering construction is also set to decline over the next couple of years, it is perhaps little wonder that future markets are beginning to look for further interest rate cuts (plural) towards a cash rate of just 1.50%. </div>
<div> </div>
<div>While forecasters are expecting the economy to grow at a moderate pace in Q3, on the evidence of the above numbers there could potentially be some downside risk, particularly if resources construction resumes its contraction. </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>
</body></html>

pwargent-M4siyDbqQY

Residential construction peak: Pete Wargent

<html><body>
<p>As Property Bloom nears it's one hundredth development project, it occurred to me that we, as project managers and our clients as investors/developers, have been contributing to the diversity of main stream housing supply.</p>
<p>What I mean by this is that we build small dwellings - two or three bedroom villas that once subdivided end up on small, manageable lots. The majority of new housing stock is still four or five bedroom family homes.  </p>
<p>I read a document released by the NSW Government Planning and Environment  department about the importance of housing diversity. It mentions the changes occurring in the housing market which are driven by demographics, affordability and lifestyle trends. </p>
<p>Families are having less children and some choosing not to have any at all, couples are working longer hours leaving less time for property and yard maintenance, there are more single person households than ever before,  first home buyers are looking for more affordable homes and we are living independently  longer and so older people are looking for low maintenance properties.  </p>
<p>Whilst the mainstream consumer is still after the large four to five bedroom homes, there is a definite need for smaller dwellings. In one of the locations we are developing in, there is strong demand by older buyers who want to down size but live close to their kids who have built their four bedroom dream home in this premium estate. There are so few smaller dwelling available that when one does become available there are several buyers vying for it.</p>
<p>So this is what we do, find these areas and meet the demand. There is a need to diversify the types of housing available in new release areas to ensure housing is affordable and meets the needs of all community members.</p>
<p><em>Jo Chivers is chief executive officer of property development project managers <a href="https://www.propertybloom.com.au/about" target="_blank">Property Bloom</a>.</em></p>
</body></html>

The importance of housing diversity: Jo Chivers

<html><body>
<p>GUEST OBSERVER</p>
<p>Population growth nationally remains strong but continues to trend lower, meanwhile dwelling construction is booming creating a much closer relationship between housing supply and demand.</p>
<div>
<p>Demographic data for December 2015 was released by the Australian Bureau of Statistics (ABS). The data showed that the national population was estimated at 23.9 million persons, with the population having increased by 326,073 persons over the 2015 calendar year. The annual increase in population has fallen substantially from a peak of 459,504 persons over the 12 months to December 2008.</p>
<p>While population growth (ie housing demand) has slowed, dwelling construction has increased to record highs. Over the 12 months to December 215, there was a record-high 190,072 dwellings constructed nationally. </p>
<p>With an increasing population, and the majority of growth coming from overseas migration, additional demand for housing is created. The charts published in this report look at the ratio of population growth to dwelling completions.  A few important things to note from this analysis:</p>
<ol>
<li>The figures don’t take into consideration demolitions and homes constructed for non-permanent or semi-permanent occupation (previously estimated by the RBA at approximately 15 percent)</li>
<li>Dwelling completions data may include construction of temporary accommodation such as hotels or serviced apartments</li>
<li>An increase in population doesn’t necessarily create more demand for housing. For example a family having a baby may not create an immediate requirement for more housing while a new arrival from overseas is more likely to create additional housing demand.</li>
</ol>
<p>The latest housing and occupancy costs research from the ABS showed that the average household sizes across each state and territory in June 2014 was: 2.6 persons in NSW, Vic, Qld and ACT, 2.4 persons in SA and Tas and 2.7 persons in WA and NT.</p>
<h3>Ratio of population growth to dwelling completions</h3>
<p><a href="/images/2016/07/06/2016-07-04--nsw-qld-image1.jpg" target="_blank">Click to enlarge</a></p>
<p><br><img src="/images/2016/07/06/2016-07-04--nsw-qld-image1.jpg" alt=""></p>
<p><a href="/images/2016/07/06/2016-7-04--nt_Act-image2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/07/06/2016-7-04--nt_Act-image2.jpg" alt=""></p>
<p>If we look at the charts, over 2015 the ratios of population growth to dwelling completions have been recorded at: 2.4 in NSW, 1.9 in Vic, 1.6 in Qld, 1.0 in both SA and WA, 0.8 in Tas, 0.4 in NT and 1.3 in ACT. </p>
<p>Based on these measures compared to the average household size it would appear that each state and territory is currently over-building however, there are some short-comings of this analysis as detailed above.  It is clear that the ratio compared to the long-run average implies that under-building is still taking place in NSW and Vic while over-building is occurring elsewhere.</p>
<p>Additionally, in most states, there has previously been a substantial undersupply of housing which will continue to overhang any overbuilding for a period of time.</p>
<p>Another thing to consider when looking at this analysis is the type of dwellings that are being constructed.  Units are becoming a much more prominent part of dwelling construction.  Units are often smaller and therefore likely to house fewer residents than a detached house which also has an impact on these figures.</p>
<p>Although this analysis doesn’t provide a definitive answer to whether too much construction is taking place it is clear that as population growth has slowed and dwelling construction has ramped-up there is now a much better relationship between housing supply and demand.  This is highlighted by the fact that in most states and territories there has been a sharp decline in the ratio of population growth to dwelling completions over recent years.</p>
<p>With many new dwellings under construction and even more approved to commence construction, developers should take heed of these figures and exercise caution when looking to undertake new projects.  As population growth trends lower and construction ramps up, housing shortages appear to be diminishing quite rapidly.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
</div>
</body></html>

Dwelling completions boom as population growth slows: Cameron Kusher

<html><body>
<p>EXPERT OBSERVER</p>
<div class="page" title="Page 1">
<div class="layoutArea">
<div class="column">
<p><span>The Reserve Bank of Australia (RBA) is right to put a spotlight on risks to the economy and housing affordability from a continued slide in construction.</span></p>
<p><span>The RBA’s Deputy Governor Guy Debelle has today used a speech to point to a ‘sizeable downturn’ across the housing construction sector. </span></p>
<p><span>The alarm bells have been ringing for some time on the continued slide in housing approvals and construction</span></p>
<p><span>The dual effects will be a drag on the economy that the RBA estimates could trim as much as one percent of the nation’s GDP and a worsening story on affordability. </span></p>
<p><span>We now face the prospect of supply softening at a time when access to credit begins to ease, demand lifts and in select market, prices return to an upward trajectory. </span></p>
<p><span>Homebuyers who witnessed one cycle of escalating price rises a few years back now must wonder if the gap between supply and demand will again leave them locked out of the housing market. </span></p>
<p><span>New housing construction is crucial to the nation’s economic trajectory – providing jobs up and down the supply chain, as well as boosting wages and consumer confidence. </span></p>
<p><span>We need a full-throated effort from all tiers of government to remove the impediments to housing construction. </span></p>
<p><span>This includes more focus on removing the planning and regulatory barriers that stifle new projects, as well as the inefficient and inequitable taxes and charges imposed on new housing.</span></p>
<p><span>Connie Kirk is the National Executive Director at UDIA.</span></p>
<p> </p>
</div>
</div>
</div>
</body></html>

jrobinson-rf4aSBido9

RBA right to call out risks from sliding housing activity: UDIA

<html><body>
<p>EXPERT OBSERVER</p>
<p>Aussie businesses are operating under challenging conditions. Weaker sales and trading are restraining production and weighing on profit margins. A softening in demand is largely attributable to slowing economic activity in the lead up to the Federal election. But growth in producer prices remains subdued.</p>
<p>Cost pressures are continuing to build, however, and are mostly being absorbed by Aussie businesses. In fact, over the past two years, raw material and intermediate good prices have lifted by around 6 per cent, while final output prices have lifted by 3.5 per cent. Rising commodity prices, especially for crude oil, gas and iron ore have shown up in lifting input prices – particularly for the manufacturing sector – which experienced a contraction in activity earlier this year.</p>
<p>And Australian companies - especially in the services sector - are experiencing greater competition given the fact that consumers can buy goods whenever they want and wherever they are – domestically or from overseas.</p>
<p>The Aussie property market might be stabilising, but softness was evident prior to interest rate cuts and the Federal Election. Gaining access to credit was more difficult as bank lending standards were tightened. Builders reduced prices aggressively as budding home owners were discouraged from committing to new builds due to falling home prices. Costs fell by the most in Victoria, down 3.1 per cent over the year to June – the biggest annual decline in 6½ years. And over the year to June, Aussie housing costs fell by the most since June 1999.</p>
<p><strong>Producer prices</strong></p>
<p>The “final demand” component of producer prices (business inflation) rose by 0.4 per cent in the June quarter to stand 2.0 per cent higher than a year ago. Of final stage prices, domestic goods prices rose by 0.3 per cent (1.7 per cent annual), while import goods prices rose by 1.4 per cent in the quarter and by 3.8 per cent over the year.</p>
<p>According to the Australian Bureau of Statistics, the lift in final stage prices (excluding exports) was driven by increases in Petroleum refining and petroleum fuel manufacturing (up 11.7 per cent), “Other” transport equipment manufacturing (up 5.3 per cent) and Heavy and civil engineering construction (up 0.5 per cent).</p>
<p>Final stage prices increases were partly offset by falls in the prices received for “Other” agriculture (down 7.7 per cent), Electricity supply, gas supply, water supply, sewerage and drainage services (down 1.0 per cent) and Fishing (down 13.1 per cent).</p>
<p>Prices of intermediate goods were flat in the June quarter to stand 1.6 per cent higher over the year.</p>
<p>Preliminary stage materials rose by 0.2 per cent in the June quarter to be up 2.0 per cent over the year.</p>
<p>Manufacturing input prices rose by 2.2 per cent in the June quarter due to an increase in Oil and gas extraction (up 7.1 per cent), Metal ore mining manufacturing (up 5.9 per cent) and Agriculture to manufacturing (up 3.1 per cent) prices. Output prices rose by 1.0 per cent in the June quarter due primarily to a lift in Petroleum refining &amp; petroleum fuel manufacturing (up 9.3 per cent) prices. Output prices are up 3.0 per cent over the year with inputs up 3.9 per cent.</p>
<p>House construction input costs rose by 0.2 per cent in the June quarter to be up 1.8 per cent over the year – near the slowest annual pace in five years. Electrical equipment prices rose the most (up 6.1 per cent), followed by “Other” materials (up 2.5 per cent), timber, board &amp; joinery (up 1.2 per cent) and “Other” metal products (up 1.2 per cent).</p>
<p>House construction output prices fell by 0.5 per cent June the June quarter to be down 0.7 per cent over the year – the weakest annual growth rate in 20 years.</p>
<p>Building construction output prices rose by 0.4 per cent in the June quarter to be up 1.4 per cent over the year – the slowest annual growth rate in 3 years. Queensland building construction prices fell by 0.1 per cent over the year to June – the slowest pace in 7 years.</p>
<p>“Other” residential (apartments) building construction rose by 0.9 per cent in the June quarter and lifted by 2.7 per cent over the year to June.</p>
<p>Heavy and civil engineering costs lifted by 0.5 per cent in the June quarter to be up 3.0 per cent over the year.</p>
<p>Commercial building output prices rose by 0.8 per cent in the June quarter to be up 2.3 per cent over the year.</p>
<p><strong>What are the implications for interest rates and investors?</strong></p>
<p>Aussie business continues to absorb higher costs. The good news is that the cost increases have slowed. The hope is that businesses may get in a position where they can direct more dollars the way of their employees.</p>
<p>The Reserve Bank is expected to sit back for a few months before deciding the next move on rates.</p>
<p><em><strong>RYAN FELSMAN i</strong>s a Senior Economist for CommSec</em></p>
</body></html>

j.ballantyne1990-6AQqhLzZaK

Cost of building a house posts biggest slide in 20 years: CommSec's Ryan Felsman

<html><body>
<p class="x_MsoNormal">New home building held up well during the September 2018 quarter despite the tougher market conditions, according to Master Builders Australia’s chief economist Shane Garrett. </p>
<p class="x_MsoNormal">The ABS figures on Construction Work Done released this morning indicate that new residential building work eased back by 1.8% during the quarter but was still some 4.7% higher than a year earlier. </p>
<p class="x_MsoNormal">“Surprisingly, the apartment/unit side of the market put in a strong performance and came close to surpassing its busiest quarter on record. Work on detached houses fell by 3.2% compared with the previous quarter,” Shane Garrett said. </p>
<p class="x_MsoNormal">“The performance of residential building has proven more resilient than expected in light of the unfolding credit crunch and less favourable conditions in Australia’s largest housing markets,” he said. </p>
<p class="x_MsoNormal">“Going forward, we do expect the tougher financial environment to take its toll on the volume of new home building over the next few years.</p>
<p class="x_MsoNormal">"Larger apartment projects will probably see the biggest reduction,” Shane Garrett said. </p>
<p class="x_MsoNormal">Today’s figures also indicate that non-residential building declined by 2.4% during the September 2018 quarter and that engineering construction fell by 4.5%. </p>
<p class="x_MsoNormal">“With the federal Budget set be delivered earlier next year, it is important that it includes measures to support our sector’s capacity to meet the building needs of a steadily growing population,” Shane Garret said.</p>
</body></html>

New home building holds up

<html><body>
<p>The Australian Bureau of Statistics <a href="http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5609.0Main%20Features1January%202018?opendocument&amp;tabname=Summary&amp;prodno=5609.0&amp;issue=January%202018&amp;num=&amp;view=" target="_blank">housing finance figures</a> released Tuesday reveal a modest increase in the total value of dwelling commitments, up an overall 0.7% for the month of January on a seasonally adjusted basis. The investor segment (up 1.1%) was stronger than owner-occupied housing (up 0.5%).</p>
<p>Yet the overall rise in value masked the fact that the number of dwellings purchased fell. Purchases of established dwellings was down 4.7% on the month, and new dwellings down 1.5%. </p>
<p>On the other hand, construction of new dwellings was up 3.1%. Now we can’t tell too much by a single month’s data, but if those kind of numbers were part of a broader pattern then there would be reason to be concerned.</p>
<p>Banks have tightened their underwriting standards and the Australian Prudential Regulation Authority has cracked down on interest-only loans. So housing credit is harder to come by – although it’s still ridiculously easy to obtain. </p>
<p>However, the construction sector works on a bit of a time lag. So there are a bunch of projects underway that were premised on the loose credit of recent years.</p>
<p>When they are finished there will be a lot of properties for sale and a relative paucity of buyers. That would have a price impact, spook potential buyers and their bankers further, and could lead to a sharp pullback in the construction sector. A sector which constitutes 8% of GDP and 9% of employment.</p>
<p>As the kids say, “sad face emoji”.</p>
<p>Now this scenario is not for certain. But it’s definitely something to keep and eye on in coming months.</p>
<p>The closely watched <a href="https://business.nab.com.au/nab-monthly-business-survey-february-2018-28876/" target="_blank">NAB Business Conditions Survey</a> hit all time highs in February. The business conditions index was up three points to 21 index points, the highest level since the monthly survey began in March 1997. Yet business confidence was down two points to nine.</p>
<p>NAB chief economist Alan Oster pinpointed the reason for the divergence in the two measures, saying:</p>
<p>The fall in confidence may reflect the turbulence seen in international financial markets in early February, but confidence remains above average, suggesting that the impact was relatively limited.</p>
<p>The survey also showed that forward orders were strong, rising from three index points to 11, which seems to bode well for future economic growth. It also confirmed the recent trend of strong employment growth, with 400,000 jobs added in 2017.</p>
<p><a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">Richard Holden</a>, Professor of Economics and PLuS Alliance Fellow, <em><a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a></em></p>
<p>This Vital Signs column was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-five-economic-red-flags-to-watch-for-in-2018-87851" target="_blank">original article</a>.</p>
</body></html>

Housing Construction

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Housing Construction

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News