AdviserVoiceDwelling starts down further weakness ahead https://www.adviservoice.com.au/2011/03/dwelling-starts-down-further-weakness-ahead/ Financial planner information & financial planner education/CPD - AdviserVoice Thu, 04 Jun 2026 21:30:42 +0000 en-US hourly 1 https://wordpress.org/?v=7.0 Dwelling starts down further weakness ahead https://www.adviservoice.com.au/2011/03/dwelling-starts-down-further-weakness-ahead/ https://www.adviservoice.com.au/2011/03/dwelling-starts-down-further-weakness-ahead/#respond Mon, 21 Mar 2011 06:51:15 +0000 https://adviservoice.com.au/?p=6652 Dwelling starts
  • Australian dwelling starts fell by 5.3 per cent in the December quarter. The side in dwelling starts was due to weakness in activity in both the private and public sector.
  • Private sector commencements were weaker by 4.1 per cent in the quarter with house starts down 8.0 per cent and apartment starts up 4.2 per cent.
  • In 2010, 168,285 dwellings were started, up 10.6 per cent on the decade average and up 8.5 per cent on the 5-year average.
  • In the December quarter, starts fell in all but one of the eight states and territories. Starts are at record highs in the ACT – a stunning 83.3pct higher than decade averages. The main risk is that the ACT market will experience indigestion later this year.

What does it all mean?

  • It’s clear that towards the end of 2010 housing activity dropped off, with dwelling commencement sliding by over 18 per cent in the second half of the year. However the slide in activity levels comes after a serious ramp up in building. In fact when you look at the whole year almost a 170,000 dwelling were started up 10.6 per cent on the decade average.
  • Interestingly in the December quarter, starts fell in all but one of the eight states and territories However only Queensland has dwelling commencements that are below 5-year or decade averages. And only NSW has dwelling commencements below decade averages so suggestions of substantial under-building in Australia are wide of the mark.
  • At present the increased supply of homes in the market, together with the softening of demand in response to higher interest rates is leading to more balanced conditions and more sustainable growth of home prices. CommSec expects Australian home prices to grow by 5 per cent over 2011.
  • Looking forward it is likely that activity in the housing sector will continue to moderate. The rate hikes have robbed the housing sector of momentum, and with construction loans at two year lows it is unlikely that new building will be buoyant in the near term.

What do the figures show?

Dwelling commencements

  • The number of dwelling commencements fell by 5.3 per cent in the December quarter after sliding by 13 per cent in the September quarter. Private sector commencements were weaker by 4.1 per cent in the quarter with house starts down 8.0per cent and apartment starts up 4.2 per cent.
  • In the December quarter, starts fell in all but one of the eight states and territories. Leading the gains was the ACT (up 75.0 per cent). Starts fell most in the Northern Territory (down 37.3 per cent), followed by Victoria (down 15.9 per cent), Tasmania (down 14.4 per cent), South Australia (down 14.1 per cent) and Queensland (down 5.9 per cent), NSW (down 2.1 per cent), and Western Australia (down 0.6 per cent).
  • Starts are at record highs in the ACT – a stunning 83.3pct higher than decade averages. The main risk is that the ACT market will experience indigestion later this year.
  • In 2010, 168,285 dwellings were started, up 10.6 per cent on the decade average and up 8.5 per cent on the 5-year average.

What is the importance of the economic data?

  • The ABS figures on dwelling commencements are compiled on the basis of returns collected from builders and other individuals and organisations engaged in building activity. The data is useful in highlighting activity levels in residential construction.

What are the implications for interest rates and investors?

  • The longer term fundamental for property look attractive. The Reserve Bank is unlikely to embark on significant rate hikes, population growth remains strong, and rental vacancy rates continue to fall. The tightness in the labour market is also likely to drive up skilled migration over the coming year adding to the demand for homes.
  • It is looking likely that the Reserve Bank will remain on the interest rate sidelines over the next couple of months. Confidence is clearly paramount to the recovery cementing itself. Even the economic data has been patchy in recent times, while the impact of the natural disasters both domestically and globally is still filtering through the economy.

Produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, neither Commonwealth Bank of Australia ABN 48 123 123 124 nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report.

The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.

This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 a wholly owned but not guaranteed subsidiary of Commonwealth Bank of Australia. This report is approved and distributed in the UK by Commonwealth Bank of Australia incorporated in Australia with limited liability. Registered in England No. BR250 and regulated in the UK by the Financial Services Authority (FSA). This report does not purport to be a complete statement or summary. For the purpose of the FSA rules, this report and related services are not intended for private customers and are not available to them.

Commonwealth Bank of Australia and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report.

]]> Dwelling starts
  • Australian dwelling starts fell by 5.3 per cent in the December quarter. The side in dwelling starts was due to weakness in activity in both the private and public sector.
  • Private sector commencements were weaker by 4.1 per cent in the quarter with house starts down 8.0 per cent and apartment starts up 4.2 per cent.
  • In 2010, 168,285 dwellings were started, up 10.6 per cent on the decade average and up 8.5 per cent on the 5-year average.
  • In the December quarter, starts fell in all but one of the eight states and territories. Starts are at record highs in the ACT – a stunning 83.3pct higher than decade averages. The main risk is that the ACT market will experience indigestion later this year.

What does it all mean?

  • It’s clear that towards the end of 2010 housing activity dropped off, with dwelling commencement sliding by over 18 per cent in the second half of the year. However the slide in activity levels comes after a serious ramp up in building. In fact when you look at the whole year almost a 170,000 dwelling were started up 10.6 per cent on the decade average.
  • Interestingly in the December quarter, starts fell in all but one of the eight states and territories However only Queensland has dwelling commencements that are below 5-year or decade averages. And only NSW has dwelling commencements below decade averages so suggestions of substantial under-building in Australia are wide of the mark.
  • At present the increased supply of homes in the market, together with the softening of demand in response to higher interest rates is leading to more balanced conditions and more sustainable growth of home prices. CommSec expects Australian home prices to grow by 5 per cent over 2011.
  • Looking forward it is likely that activity in the housing sector will continue to moderate. The rate hikes have robbed the housing sector of momentum, and with construction loans at two year lows it is unlikely that new building will be buoyant in the near term.

What do the figures show?

Dwelling commencements

  • The number of dwelling commencements fell by 5.3 per cent in the December quarter after sliding by 13 per cent in the September quarter. Private sector commencements were weaker by 4.1 per cent in the quarter with house starts down 8.0per cent and apartment starts up 4.2 per cent.
  • In the December quarter, starts fell in all but one of the eight states and territories. Leading the gains was the ACT (up 75.0 per cent). Starts fell most in the Northern Territory (down 37.3 per cent), followed by Victoria (down 15.9 per cent), Tasmania (down 14.4 per cent), South Australia (down 14.1 per cent) and Queensland (down 5.9 per cent), NSW (down 2.1 per cent), and Western Australia (down 0.6 per cent).
  • Starts are at record highs in the ACT – a stunning 83.3pct higher than decade averages. The main risk is that the ACT market will experience indigestion later this year.
  • In 2010, 168,285 dwellings were started, up 10.6 per cent on the decade average and up 8.5 per cent on the 5-year average.

What is the importance of the economic data?

  • The ABS figures on dwelling commencements are compiled on the basis of returns collected from builders and other individuals and organisations engaged in building activity. The data is useful in highlighting activity levels in residential construction.

What are the implications for interest rates and investors?

  • The longer term fundamental for property look attractive. The Reserve Bank is unlikely to embark on significant rate hikes, population growth remains strong, and rental vacancy rates continue to fall. The tightness in the labour market is also likely to drive up skilled migration over the coming year adding to the demand for homes.
  • It is looking likely that the Reserve Bank will remain on the interest rate sidelines over the next couple of months. Confidence is clearly paramount to the recovery cementing itself. Even the economic data has been patchy in recent times, while the impact of the natural disasters both domestically and globally is still filtering through the economy.

Produced by Commonwealth Research based on information available at the time of publishing. We believe that the information in this report is correct and any opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. To the extent permitted by law, neither Commonwealth Bank of Australia ABN 48 123 123 124 nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report.

The report has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, any individual should, before acting on the information in this report, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice. In the case of certain securities Commonwealth Bank of Australia is or may be the only market maker.

This report is approved and distributed in Australia by Commonwealth Securities Limited ABN 60 067 254 399 a wholly owned but not guaranteed subsidiary of Commonwealth Bank of Australia. This report is approved and distributed in the UK by Commonwealth Bank of Australia incorporated in Australia with limited liability. Registered in England No. BR250 and regulated in the UK by the Financial Services Authority (FSA). This report does not purport to be a complete statement or summary. For the purpose of the FSA rules, this report and related services are not intended for private customers and are not available to them.

Commonwealth Bank of Australia and its subsidiaries have effected or may effect transactions for their own account in any investments or related investments referred to in this report.

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