Australia has never had more dwellings under construction than at the end of June 2021, according to the latest data. Every measure of housing activity was higher over the quarter, perhaps unsurprising, but still remarkable!
Look closely at the chart below and we can see the congruence of two very significant data points.
First, the green line shows the houses that are under construction at the end of the June quarter. Never been higher at a whopping 88,446 dwellings and 16.8% higher than the prior quarter.
Second, the blue line shows commencements, and again, we can see they have never been higher at 41,276 dwellings, but the red line shows completions pretty flat at 27,318 dwellings.
So, commencements outstripped completions in the June quarter by 13,958 dwellings!
The reason this is important is because it shows us a pipeline of building work that continues to expand, putting every last activity and material under pressure in the supply chain.
If there is one compensating factor to the amount of work in the pipeline and the forces being applied to that, it is that the commencement of most of the Home Builder program are already in the pipeline and anything new being added from here on in does not have the same regulatory completion pressures applying to it.
Of course, there is another compensating factor: its no bad thing to be able to look to a future load of work that is at record levels.
Perhaps the best way to examine that is by looking to the value of the work in the pipeline.
At the end of June, the value of work on new houses alone was AUD70.56 billion, with the June quarter rise of 18.9% the highest ever recorded.
In the next chart, we can see the supply chain doing all it can to build its head off, adding a total AUD38.3 billion in new commencements (yep, another record), with total residential value at a (yes, again) record AUD24.8 billion and non-residential reaching (mmhmm) a record AUD13.5 billion.
It is important to note that the total commencements for the full year will lift steeply again in the September quarter data, when the very low September quarter of 2020 is removed from the annual calculation. When that AUD25.9 billion comes off the total and something close to AUD35-40 billion is added, Australia’s year-end value of building work commenced will be above AUD135 billion for the first time.
Whatever else we may say, that will take a fair while to build out.
A final point of detail. It is not all new and it is not all houses. In the June quarter, the value of house commencements was AUD13.4 billion (+17.4% on the March quarter), the value of multi-residential dwellings however lifted 50.4% from a lower base to AUD8.3 billion and even alterations and additions to existing dwellings hung in there at AUD3.1 billion, up 2.7% on March.
No matter where we look, the residential skyline is filled with scaffolds, frames, new roofs and more than enough work to keep the industry busy for a fair while to come.
