Residential construction in australia slips at start of 2013

“According to today’s figures, the volume of residential construction declined by 1 per cent in the first quarter of 2013. This was comprised of a 0.5 per cent reduction in new dwelling volumes as well as a 4 per cent fall in renovation volumes during the quarter,” said HIA Senior Economist Shane Garrett.

“The slight fall in building activity in the first quarter of 2013 is at odds with the generally improving conditions over previous quarters. In spite of today’s disappointing figures, we continue to believe that housing activity is in recovery mode. The fact that residential activity has faltered shows that there is no room for complacency. However, this is a delicate recovery and policy settings need to be as supportive as possible to ensure that it is sustained,” he added.

“When compared with twelve months ago, the picture is a little more encouraging. Residential building activity rose by 2.1 per cent, with particularly strong growth of 4.1 per cent in work done on new dwellings. Renovations activity continued to deteriorate with an annual decline of 8.9 per cent in the first quarter of 2013.”

Garrett concluded: “The general recovery in new home building activity shows that the succession of RBA rate cuts is having positive effects and that further reductions will help safeguard the revival. On the other hand, the dismal performance of renovations places the banks very firmly in the dock. Evidence on the ground tells us that lenders are not forthcoming when it comes to home equity release financing. This is really hurting renovations activity.”