New home building fell back into recession

by Chris Lang on September 13, 2012

New home building is down

According to the latest press release by the HIA, Australia’s new home building sector fell back into recession in 2011/12.

ABS Dwelling Commencements update for June 2012 has shown that the current number of new home commencements in 2011/12 fell 11.7 per cent to 138,852. Dr. Harley Dale, HIA Chief Economist, says that there have only been two occurrences in the last fifteen years where the total number of dwelling commencements in a year has been lower than it is now – the first was at the time the GST was introduced, and the second was in 2009 during the worst of the financial crisis.

Even though the most recent data for June 2012 quarter shows an increase of 4.6 per cent, this is not enough to make the annualised housing starts look good (136, 484 is still quite a low figure).

The detached dwelling commencements, seasonally adjusted, fell by 2.2 per cent in the June 2012 quarter. “This result continued the downward trajectory and provided not only the tenth consecutive quarterly decline but also the lowest number of detached house starts in any quarter since June 2001,” Harley Dale said.

On the national level, commencement of non-detached dwellings rose by 17.2 per cent – the main driving factor behind this was policy changes in New South Wales and Victoria. According to Dr. Harley Dale the market’s response to these policy changes resulted in very impressive increases of 64.5 per cent in NSW and 15.8 per cent in Victoria.

Naturally, Dr. Dale’s opinion is that to give dwelling commencements a push it would require “policy reform and investment from federal and state governments, augmented by further interest rate deductions”.

Do you think the government should intervene and save the day, or stand back and let nature take its course?

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