September quarter building activity was at the lowest level in six years, contracting 1.9% as softness in approvals from 2018 and 2019 made itself felt, underscoring the long pipeline of building activity that follows approvals.
Although there was a 1.1% lift in the value of building work undertaken on new houses, the 6.2% drop in apartment building was enough to turn the aggregate measure down, even as the value of alterations and additions work lifted a healthy 5.1% over the quarter.
The small quarterly lift in the value of work done on houses in the September quarter is set out below. Note that the annualised value, though it is declining, is on a very sharp axis and the decline is far more modest than the line indicates.
To go straight to the dashboard and take a closer look at the data, click here.
The second chart shows the value of work done in the multi-residential dwelling sector, which is dominated by 4+ Storey Apartments, but includes One and Two Storey Townhouses.
Over the same time period as displayed for houses, we can see that the experience has been persistently down, which is coming though in a still declining annualised value of work done.
To go straight to the dashboard and take a closer look at the data, click here.
As befits the boom and bust cycles of the multi-residential sector, we can observe in this chart the rise of activity as approvals screamed upwards in the last boom, the plateau that defied the traditional boom and bust logic of housing markets, and then, of course, the fall, which is now nine quarters (2.25 years) long.
Doubtless, the current surge in dwelling approvals will flow through into additional work to be done on dwellings over the next two years. It will lift these activity numbers higher, and for however long it lasts, add significantly to the amount of building work to be completed.
Unlike houses and apartments, where the lag between approvals and construction activity can be quite long, the lag for Alterations and Additions is relatively shorter, on average.
While the chart shows a patchy sector that flexes up and down on short cycles and relatively quickly, it also demonstrates the role that renovations play in the housing economy. Albeit at lower levels than for new building, renovation works are quite stable, shifting through an annual range that over the last almost six years, has been only as low as AUD9.114 billion and only as high as AUD9.572 billion. In the September quarter, activity in the sector was a healthy 5.1% higher than the prior quarter.
The inclusion of this sector in the government stimulus package was evidently devised as a means of keeping work going at stable levels, rather than blasting the housing sector into a new gear, as appears to have occurred with the ‘new build’ stimulus.
To go straight to the dashboard and take a closer look at the data, click here.
Australia’s aggregate building activity levels are well below peak right now, but are giving all the appearance of ramping up to meet the demand that new approvals, government stimulus and cheap debt has delivered. We can expect to see these building activity measures higher in coming quarters.
