Many housing market factors prompted the Reserve Bank of Australia to leave rates on hold. These included lenders increasing investor and interest-only mortgage rates. Along with the Budget announcement of a $6.2 billion bank levy. Several lenders even suggest that this lender tax hike will pass onto consumers. Consequently, these factors will result in a household spending decline, and the tightening of the housing market with less buying.
Fewer Buyers Create Higher Supply
Data suggests that housing demand is lower in some areas than advertised stock levels. Thus, housing prices in these areas are fluctuating. As such, CoreLogic suggests that Sydney dwelling prices declined by 0.04% over April and Canberra’s by 2.76%. Apartment values declined by between 0.91% in Melbourne to as much as 3.13% in Brisbane. But, annual growth rates in most capitals are positive. Over this time, Sydney saw a 16.04 rise in dwelling values, Melbourne 15.27% and Hobart 13.59%.
Furthermore, CoreLogic suggests that across the combined cities there is currently 4.4 months’ worth of housing stock. This figure is the highest it’s been annually since 2012.
Economists suggest high housing stock levels and lower prices are due to a slowing rate of transactions, rather than more properties listed on the market. In Sydney, for example, there is a 3-month supply of housing stock across the city, the highest since 2012. Subsequently, Melbourne has a 4.2-month supply, and Brisbane 5.1 months. Of the joint cities, Adelaide and Canberra have the lowest supply of 3.7 months and 2.6 months respectively.
However, according to CoreLogic, a mix exists in the building and construction market nationally. Construction levels are declining within the engineering sector, but booming in the residential sector.
Residential Building and Construction
After mining booms, construction in Australia is significantly less. Nevertheless, in saying this, the market is still strong.
According to Australian Construction Industry Forum (ACIF) data released in May 2017, growth in Engineering Construction spiked in 2012-13. Around the same time, residential construction also bottomed.
Corresponding to the ACIF forecasts, Residential Building will peak at $100 billion in 2016-17 with 220,000 homes constructed. The highest number on record. Therefore, this timing will be close to the bottoming of Engineering Construction. Nonetheless, in saying this, there is still a lot of activity in the engineering sector.
Records suggest the 2016-17 turnover of Engineering Construction will reach $80 billion. Plus, there are still many larger construction projects to complete.
CoreLogic data indicates the following projects are still in the pipeline:
- NSW – A $213 million upgrade of the Garden Island naval base and the TFE Hotels takeover of the $4.5 million Vibe Hotel.
- ACT – Rejuvenation of Northbourne Avenue corridor and redevelopment of the former Dickson Motor Vehicle Registry site.
- VIC – The development of the West Gate tunnel and the $88 million Victoria State Library.
- QLD – Manning Street expansion and the Aldoga Renewable Energy project.
- TAS – The Seven Mile Beach sport and recreation precinct improvement and $80 million in development proposals.
- SA – Continued development of the $9 billion South Road Superway, Holdfast Bay Glenelg Jetty and proposed 250MW government-owned gas power plant.
- NT – Remote housing expansion.
- WA – Construction of 440 apartments and the Roe 8 main road project.
- Mining – The port and rail $6 billion Balla Balla project.
Other notable developments include the NBN rollout and major road and rail projects. Of course, there are still many apartment developments still under construction.
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