Housing starts have fallen a seasonally adjusted 12.6 per cent in the March 2012 quarter to just 30,623 starts. This is the lowest number of commencements since 2001 and further evidence not all is well in the housing market. For the year, housing starts have plunged 24.5 percent.
Short term stimulus in the form of the First Home Owners’ Boost (FHOB) and various state government incentives helped prop up an unsustainable housing market after the GFC. Most of this stimulus has now gone, removing any artificial support.
In New South Wales, starts are at the lowest level since records starting in September 1984. Last week, the NSW government announced more stimulus to help its faltering housing building sector. The state grant for first home buyers building a new home under the value of $650,000 will increase from $7,000 to $15,000 on the 1st October 2012. In addition, other buyers will get a $5,000 new home grant for new home purchases up to $650,000. It is possible buyers may hold off purchases until the 1st of October in order to qualify for the new incentives.
» 8750.0 – Dwelling Unit Commencements, Australia, Preliminary, Mar 2012 – The Australian Bureau of Statistics, 20th June 2012.
» First home buyers grant doubled in NSW – News Limited, 12th June 2012.
Startling numbers although I would have expected a few more volume builders to have hit the wall by now. They gorged heavily during the last five years and many would have become inefficient and heavily exposed to the downturn.
Should have also added most of the volume builders are private companies, so very hard to get good data on where they’re at. But here’s the 5 year chart on a large residential land developer who nearly went bust during the GFC. They tapped the market successfully in ’09 just before the FHOB and soon doubled their share price. They’re now back to plumbing towards historic lows under 50c per share. Pretty ugly if you bought in and held at over $4.50 four years ago.
http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=FKP&compare=comp_index&indicies=0&pma1=0&pma2=0&volumeInd=9&vma=0&TimeFrame=M5
They’re still building in Melbourne. You’d think someone might have tapped them on the shoulder and pointed it out.
The over-supply is going to smash rents. I can just laugh when I look at the hundreds of apartments going up in Preston, all bought off the plan with expectations they’ll be perennially rented out to international students or flipped for profit.
No buyers. No students. Plenty of other boxes in the sky all the same. All competing for the same tenants and buyers.
The construction sector is being crunched, retail is being decimated, a week doesn’t go by without some big organization hitting the wall and sacking half if not all of it’s entire workforce yet somehow the unemployment rate keeps going down as if everyone is hiring again and car sales keep booming.
What’s going on. I’m confused.
A 42% decline in ‘growth area’ land sales in Melbourne over the past 12 months strongly suggests the rate of dwelling ‘commencement’ will continue to decline.
A rough estimate on how that could impact the national numbers above would be a decline from @ 30,000 to 25.000
http://www.charterkc.com.au/newsmedia/documents/Victorian%20%E2%80%98growth%20area%E2%80%99%20land%20sales%20slide%20by%2042pc%2029-5-2012.pdf
9.1% of the work force and 2.6% are directly employed in residential construction
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/1350.0Feature+Article1Oct+2010
Thankfully, I have it on good advice, that no-one employed in this industry has a large mortgage or is negative gearing… I just don’t have a link to prove that at the tip of my fingers!
@ Arthur
Many of the ‘volume’ builders use huge numbers of sub contractors, hence their fixed costs are relatively small.
The ‘subbies’ are short on work.
Spoke to a guy in construction only this week, in charge of electrical tenders, who said he is used to receiving 2 or 3 tenders per job. The latest one he received 27! That’s a ninefold increase in the availability of labour.
Excessive supply anyone? Massive plunge in construction costs is underway.
@Michael Francis, when you see how the ABS Surveys Unemployment, you’ll see why it is so low. Its’ all in their methodology. They don’t need to fudge the numbers, it is built into the method. It is done to disguise a high unemployment rate that has been with us for a long time. I’ve stated their methodolgy in a previous post. Your head may fall off in disbelief when you see how.
Also, OK here is different, different just like everywhere else ;-P, before Japan’s bubble popped, luxury car purchases were approaching the Ionosphere. Car sales are no economic indicator. I know someone very well in fleet car management, to quote him, “…everyone that purchased or hired fleet cars on credit, are no longer buying or renting. There are just a very few buyers and renters that have the money up front.”
Housing shortage has always been a lie. It is spewed all over the media to suck the sheep in to thinking they must buy buy buy. Sucked In punters, do your homework first and open your mind.
Objective was to destroy people’s wealth and the banks with their buddy government are doing a great job currently.
Ask yourself what is the purpose of this information like Low U/Employment, Strong well placed economy and Car Sales up.
It is propaganda only. More fool the brain dead for believing them.
Back to watching footy and drinking heaps of grog in my overpriced shit box I signed up for 30 years of debt enslavement. NOT !!!!!!