After hooning along like a rev-head on Saturday night and reaching record levels in mid-2017, Australia’s expenditure on renovations declined 4.9% over the last year, to a still significant AUD8.334 billion. General housing sector conditions may have prevented more runaway expenditure, but the efforts of the cops – in this case APRA – to curtail lending, may also have had an impact.
Australian’s financial love for their own homes was never greater than over the year-ended June 2017, when total expenditure on Alterations and Additions totalled AUD8.766 billion. Since then, the decline from the peak has been relatively steep, as the chart below shows.
To go straight to the dashboard and take a closer look at the data, click here.
The red (year-end) line is most telling. However, the quarterly bars also tell a story. Over the last year, three of the four quarters saw expenditure on Alterations & Additions recorded lower than the prior corresponding period. Most recently, the June Quarter 2018 result of AUD2.047 billion was 4.5% lower than the June Quarter of 2017.
Having referred earlier to lending related constraints that may be affecting Alterations & Additions expenditure, it is important we examine them in a little more detail.
After peaking in September 2017, the value of monthly loans issued for the purposes of Alterations & Additions has declined more-or-less continuously, to total AUD310.8 million in June 2018. This was almost exactly 20% lower than in June 2017. The chart below displays these details.
To go straight to the dashboard and take a closer look at the data, click here.
Perhaps the most interesting feature of this chart is that from record highs a year ago, the value of loans for Alterations & Additions has declined, but appears to have stabilized at monthly levels not seen since the one-off slump to AUD301.4 million in December 2014.
Back then however, that was a blip on a gradual rise that was corrected by a huge increase the next month. The prospects of what is now a quarter-long flatline, suddenly and dramatically increasing seems remote.
For businesses that are supplying the housing sector and working extensively in the Alterations & Additions market, the current data makes for sobering news. Annoying though they can be, those late night hoons trying to get their house renovated in time for summer, are at least signs of activity. Over the next year, many of us will be hoping they return to a street near us.
