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The Australian Bureau of Statistics’ (ABS) building activity data for the December 2022 quarter, reported that total new dwelling commencements dropped by 6.7 per cent to 41,374 dwellings.
The total value of building work done fell by 1.1 per cent to $30.7 billion.
The fall was driven by the private sector and other residential dwellings, which fell 16.5 per cent to 12,053 dwellings and followed a fall of 11.7 per cent in the September quarter.
Private sector house commencements fell 2.3 per cent to 28,330 dwellings and followed a fall of 4.4 per cent in the September quarter.
However, the data also showed the construction industry recorded the largest percentage increase in business turnover in February, rising 4.6 per cent, following a fall in January (-3.3 per cent).
ABS’ head of business indicators, Robert Ewing, said the turnover for non-residential builders and engineering firms drove the February rise, as the industry works through a large pipeline of infrastructure projects.
“The industry is up 15.4 per cent on the same time last year, reaching its highest level since January 2010 when the turnover indicator series began.”
Across the sector, the ABS data showed administrative and support services recorded the second largest monthly rise in turnover (up 2.4 per cent), followed by transport, postal and warehousing (up 2.1 per cent).
Mining saw the largest fall in turnover (-3.7 per cent), aligning with a decline in iron ore exports and a drop in global lithium prices. This was followed by manufacturing, which fell 2.9 per cent, with weakness seen across metal and chemical manufacturers.
All 13 selected industries recorded year-on-year increases, led by accommodation and food services and administration and support services (both +21.7 per cent), followed by manufacturing (+15.7 per cent).
It comes as the cost of construction has been rising due to increasing input material prices and high labour demand.
Backlog in homes under construction
The ABS data also revealed that dwellings under construction had fallen 2.0 per cent to 238,475 after a record high of 243,456 in September.
This was despite new houses reaching a new record high of 105,111 dwellings under construction in December 2022.
Despite the record profits reported, Master Builders Australia chief economist Shane Garrett said there are “simply not enough new projects entering the pipeline” to keep up with demand.
For apartment and unit commencements, the volume of new starts had dropped to its lowest in over 10 years, Mr Garrett said.
“[The] figures also show that 172,400 new homes were completed across Australia during 2022, 3.6 per cent fewer than in 2021. This is well below the volume of new home building required to meet Australia’s housing needs over the coming years.”
Buildings approvals lift
Despite the backlog in commencements, total dwellings approved increased by 4 per cent for the month of February 2023, following a 27.1 per cent fall in January, separate ABS data has shown.
The seasonally adjusted estimate for private sector home approvals lifted by 11.3 per cent in February, to 8,520, following a 13.5 per cent decrease in January.
However, private sector dwellings (excluding houses) approved fell 9.5 per cent in February, following a 40.3 per cent January fall.
Master Builders’ CEO, Denita Wawn, said builders continue to face regulatory burdens and prolonged delays in approvals for building applications, occupation certificates and land titles.
“More needs to be done to speed up the delivery of new housing in the medium and high-density part of the market over the short term.
“Additionally, land shortages in the wrong places, high developer charges and inflexible planning laws are restricting opportunities to meet demand, speed up project timelines, and minimise costs to both builders and their clients,” Ms Wawn said.
[Related: Building industry ‘particularly concerned’ with FHB lending fall]
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