This article is from the Australian Property Journal archive
THE COVID-19 pandemic smashed housing construction in the June quarter, which fell to its lowest level since 2014, and there could be worse to come as work already in motion held up some figures during the period.
Australian Bureau of Statistics data showed the total value of residential building work done fell by 5.5% in the quarter, its fastest rate in two decades, to $16.643 billion. The figure is 12.1% lower than 12 months ago.
Total construction figures dipped 0.7% to $50.128 billion, down 2.2% over 12 months, padded by a 3.8% uptick in engineering work during the quarter.
Engineering work lifted 2.2% over 12 months, while non-residential work fell 1.5% during the quarter and to $11.773 billion, up 6.2% year on year.
Across the residential segment, work done on new detached houses fell by 5.5% through the period and is 9.4% lower year on year, while work apartments and townhouses was down 5.6% and 18.6% annually. Home renovations declined by 5.3% in the quarter, and is 1.5 per cent lower than the year ago level.
HIA senior economist Geordan Murray warned the decline in home building activity can only partially be attributed to the COVID-19 disruption.
“Most of the building work done during the June quarter was ongoing work on homes that were under construction at the onset of the shutdown,” he said.
“The majority of residential building sites around the country were able to continue operating during the initial COVID-19 lock down by implementing on-site social distancing measures. However, the pipeline of new sales came to an abrupt halt during this period.
“The drop in sales between March and May created a real risk that the decline in the amount of residential building work would have accelerated sharply in the September and December quarters.”
He said the decline in residential building work would compound the contraction in Australia’s GDP in the quarter.
“The residential building industry was two years into a cyclical downturn when COVID-19 struck and home building activity is expected to deteriorate further over the next two years.”
Murray said the HomeBuilder program has been effective in averting a rapid deterioration in home building in 2020, and created an incentive sufficient for home buyers to return to the market. The lift in sales throughout June and July made up for the drop in sales during the lockdown, he said.
