Building Decline Adds Pressure To Prices

Posted on 28/11/2019  
Building Decline Adds Pressure To Prices

The ongoing decline in the level of construction of new dwellings across the nation is likely to put further pressure on property prices.

Figures released by the ABS show that, nationally, residential construction work has fallen by 11% compared to last year.

The Housing Industry Association says the contraction in home-building shown by the ABS data was expected, given the decline in other data such as building approvals and housing finance.

HIA economist Angela Lillicrap says all states/territories declined for the September 2019 Quarter compared to the previous quarter, with the exception of Victoria - where new residential work increased by 1.8% for the quarter to be up by 4.0 % annually.

But New South Wales declined by 7.8%, Queensland by 4.7%, South Australia by 0.7% and Western Australia by 4.9%. Tasmania and the ACT, which have previously managed to buck the national trend, have also declined by 20.5% and 10.9% respectively compared to the June 2019 Quarter.

The overall decrease in the provision of new dwellings occurs at a time when buyer demand is rising. Forecasts from major analysts, including Commonwealth Bank, HSBC and SQM Research, suggest dwelling prices are likely to rise significantly in most capital cities in 2020.

The SQM Boom and Bust report tips price rises of up to 15% in major cities like Melbourne and Sydney, with solid-to-strong increases also in Brisbane, Adelaide, Perth, Hobart and Canberra.

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