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The Australian Bureau of Statistics (ABS) released its building activity data for the June quarter 2022 that provided estimates of the number of dwellings commenced, completed, under construction and in the pipeline as well as the value of building work.
According to ABS data, the total number of dwellings under construction hit a record high of 241,926 in June, showing a 0.7 per cent increase from a previous record high in March, where it stood at 240,156 dwellings.
Driving the increase was private sector houses (which increased to record highs since March 2021) with 102,908 new private houses under construction in June 2022.
Further ABS findings reported that total dwelling commencements fell 2.7 per cent to 48,076 in seasonally adjusted terms.
New private sector house commencements declined 0.2 per cent to 30,602 dwellings, and other residential commencements in the private sector fell 3.1 per cent to 16,348 dwellings. In addition, the value of building work done declined 3.6 per cent to a total of $29.9 billion.
Housing Industry Association (HIA) economist Tom Devitt stated that home builders are “struggling to compete with the enormous pipeline of work” that has built up since 2020.
Mr Devitt stated there were only 28,898 detached houses finished in the June quarter of this year, which showed a 6.3 per cent drop from the same period last year, however, there were 30,926 new detached houses that commenced construction in the June quarter.
Although this figure revealed a 0.8 per cent drop on the previous quarter and a 27.9 per cent drop from the peak seen last year, it is still 18.7 per cent higher than the same quarter in 2019 prior to the COVID-19 pandemic.
Australian home builders are now faced with 104,228 houses under construction due to more dwellings still being commenced than completed that has resulted in a pipeline that is 81.2 per cent higher than pre-COVID levels.
According to Mr Devitt, ongoing supply constraints are holding back the completion of these projects, along with shortages of skilled trades.
“These supply constraints will keep Australia’s home builders busy this year and next as they continue to work down this record volume of detached house projects,” Mr Devitt stated.
Furthermore, the multi-units market is continuing to strengthen despite commencements declining by 6.0 per cent in the June quarter to 16,966, which is still up from the lows of 2020.
“With interest rates and the cost of building increasing rapidly, affordability constraints will increasingly push home buyers back towards more affordable, higher density living and with the return of migration, demand for units should continue to strengthen,” Mr Devitt concluded.
“This increasing activity in the multi-units market, combined with ongoing activity in the detached market, will sustain elevated demands for skilled trades and obscure the effects of increasing interest rates on the broader economy.”
The ABS July results revealed that detached dwelling approvals saw a 0.7 per cent increase to 9,937, which was more than offset by a 43.5 per cent plummet in multi-unit approvals, dropping to 3,439 approvals.
[RELATED: Home approvals nudged up]
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