New home building slumps in June quarter

By Larry Schlesinger
Wednesday, 24 August 2011

Residential and commercial construction remains in the doldrums, according to the latest ABS statics.

The value of residential building construction undertaken during the June quarter fell 4.1% while commercial construction fell 6.1% on a seasonally adjusted basis.

During the June quarter just over $9.5 billion in residential building work was undertaken compared to $10.1 billion in the March quarter.

Strong activity levels occurred in Queensland, with construction work up 14.9% over the quarter

Westpac says the state is experiencing a “strong post flood rebound” with strength in “infrastructure activity, both private and public”.

The biggest slump in construction activity occurred in the Northern Territory (down 19%) while among the bigger states NSW recording a decline of 4.4% with Victoria down 3.1%.

“Weakness was generally evident elsewhere. Public building activity is weakening as stimulus is being unwound. The housing sector is facing a number of headwinds and private non-residential building activity remains weak,” Westpac says.

The value of alterations and additions to existing houses increased marginally from $1.73 billion in the March quarter to $1.79 billion over the June quarter.

For the year to date, the value of residential building construction undertaken is down 7.6% while commercial building is down 23.2%. Westpac said construction work in the second quarter was broadly in line with expectations.

The HIA called the figures "a disappointing update for new housing activity".

HIA chief economist Harley Dale said: “New residential building work done fell by 5.4% reflecting a 1.8% decline in detached housing and a slump of 11.9% in "other dwellings".

“This result suggests that new dwelling investment will detract from GDP growth in the June quarter national accounts due for release in two week's time.”

Overall, construction activity rose 0.7% over the June quarter and is up 2% on the year due to engineering construction increasing 5.9% over the quarter and 21.2% for the year to date.