Last year marked the first time in a decade that there was a synchronised weakness in new housing starts across all eight states and territories.
And its not getting better with new home sales down to their lowest level in 18 years in March 2012, the voice of Australia’s residential building industry, the Housing Industry Association, claimed today.
Its chief economist, Dr Harley Dale, says leading housing indicators are still pointing to ongoing deterioration in already very weak new home building conditions.
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“That situation is in turn having a major negative impact on manufacturing and services sectors,” he says
“It is not too late to turn the situation around.”
The HIA views any interest rate cuts as providing a helpful tonic to the residential construction industry.
But they aren’t the panacea for turning around weak housing conditions.
The HIA continues to advocate the importance of structural reform to new housing supply, suggesting there are simply too many excessive and inefficient cost obstacles to providing an adequate supply of new dwellings.
“Needless to say Australia’s banks need to pass all official rate cuts on in full, as their actions to date on interest rates have damaged economic confidence and activity.
The latest HIA – JELD-WEN new home sales report, based on a survey of Australia’s 100 largest builders, showed a sharp decline of 9.4% in total seasonally adjusted new home sales in March 2012.
Detached house sales dropped by 9.7% while multi-unit sales fell by 6.9%.
Queensland suffered the biggest drop in March, with the number of seasonally adjusted new detached house sales down by 15.3%, and while poorly taken up, the end of the building boost today might not assist any recovery.
Next followed a 12% drop in Western Australia and fall of 9.7% in NSW.
The number of seasonally adjusted new detached house sales fell by 4.6% in Victoria and 4.7% in South Australia.
The figures are an estimate, with the month’s sample size capturing 14% of Australia’s new home building industry.
As I’ve been saying for some time, the lengthening absence of data indicating any housing construction recovery – and accompanying growth in credit – must be weighing on Federal Treasurer Wayne Swan during his May budget preparations.
I suspect the federal government will throw some money at the problem so that it takes effect this year rather than save any announcement until the 2013 election year. The Federal Government will need to work in lockstep with state governments if they are to make any worthwhile advances.
This article first appeared on Property Observer.