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The Australian Bureau of Statistics has released its latest National Accounts Data, reporting GDP growth of 0.5 per cent over the quarter ending 30 June 2019, and 1.4 per cent on an annualised basis – in line with market expectations.
However, the data also revealed that over the same period, dwelling investment fell 4.4 per cent quarter-on-quarter and 9.1 per cent in annual terms.
As a result, the decline in dwelling investment stunted GDP growth by 0.2 per cent over the quarter to 30 June 2019.
Chief executive of the Property Council of Australia Ken Morrison said he was not surprised by the result.
“We’ve been highlighting the potential impact of a slowdown in housing construction on economic growth for some time, and this is now clearly showing up in the June quarter GDP result,” he observed.
Mr Morrison said the recent improvement in housing market conditions could help strengthen the sector’s contribution to GDP in the coming quarters, but added that construction activity remains subdued.
“Recent signs that housing prices are stabilising are welcome and important for consumer confidence, but housing construction is the critical driver of investment and jobs and this is falling,” he said.
“The housing construction pipeline is constricting, with building approvals down 24 per cent over the past year.
“Stronger housing prices may lead to a turnaround in construction activity down the track, but the current reality is that construction is slowing, and that will weigh on economic growth and employment well into 2020.”
Mr Morrison expressed support for policy reforms that would further stimulate the housing sector, making particular reference to measures that would ease access to credit.
“These are the dynamics of the housing markets that must focus the minds of policymakers across all levels of government,” he said.
“The biggest issue remains access to finance for purchasers, and there is a need to continue to focus on this pressing issue.
“We also need a plan to mitigate against the risk of future shortages in supply and the consequences for housing affordability.”
Mr Morrison concluded: “In this environment, state and territory governments have a big responsibility to ensure that their tax, planning and land supply policies are tuned appropriately – and in many cases, they are not.”
However, despite the negative effect of the recent housing downturn on GDP growth, Treasurer Josh Frydenberg said he is pleased with the quarterly result in light of headwinds in the global economy.
"[The] National Account numbers show the Australian economy continues to grow in the face of significant headwinds, both domestic and international," he said.
"It is a difficult time for global economies with both the IMF and OECD downgrading their global economic outlook and Germany, the United Kingdom, Sweden and Singapore, among other nations, recording negative economic growth in the June quarter.
"In the face of these challenges and the uncertainty created by the increasing trade tensions between China and the US, the Australian economy has again proven its remarkable resilience."
[Related: Credit curbs in sight as housing rebound accelerates]
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