Residential building down 5.3% in June quarter

Quarterly building activity figures have delivered depressing news for the residential construction sector spurring the Housing Industry Association to reiterate its call for a reform of housing taxation.

The value of new residential building work done fell 5.3% to $9.53 billion over the June quarter on a seasonally adjusted basis, according to the Australian Bureau of Statistics.

Work done on new houses fell 2% to $6.32 billion, while other residential building activity (units and attached housing) fell 11% to $3.2 billion over the three-month period.

NSW registered the biggest drop in new residential building work done, with activity falling by 13.7%

Building activity fell by 9.6% in Western Australia, by 6.9% in Queensland, 6.5% in the ACT and by 2.2% in Tasmania.

The only state to record a significant uptick in residential building activity was South Australia, which recorded a 7.7% rise. Activity was flat in Victoria, up just 0.8%.

The drop in new residential building was offset somewhat by an increase in the volume of major alterations and additions work done, which increased by 2.6% over the quarter. Major alterations and additions account for around 20% of total renovations activity.

HIA chief economist Dr Harley Dale says the final update for June quarter activity confirms a tale of two halves, with new home building activity continuing to deteriorate as major renovations activity climbs higher.

“Renovations activity, both in terms of major jobs … and smaller jobs valued at less than $10,000, is the source of growth in the housing industry in 2011,” says Dale.

“This situation reflects an inherently more cautious household sector post the GFC, together with the excessive taxation of new housing and very high stamp duty incurred when moving home.”

“Substantial reform of the very high and inefficient taxation of housing, especially new housing, in Australia is a vital area for policy focus and cooperation across levels of government,” he adds.