23 February 2011
Australias level of building activity has suffered its biggest fall in ten years, according to figures released by the Australian Bureau of Statistics today. In seasonally adjusted terms, building activity fell 5.1 per cent in the December quarter, the worst single quarter drop since December 2000.
The Urban Taskforces chief executive, Aaron Gadiel, said that non-residential development had plummeted by 9.2 per cent.
Commercial, retail and industrial building hasnt fallen this sharply since September 2009, Mr Gadiel said.
The fall in non-residential development is more or less uniform across NSW, Victoria and Queensland, but theres been a dramatic 24.3 per cent seasonally adjusted plunge in Western Australia.
Businesses have become more reluctant to invest in new premises in the light of uncertain economic conditions.
Mr Gadiel said that new residential building activity fell by a more modest 1.7 per cent, following a 5.2 per cent fall in the September quarter, and steady rises in the first two quarters of 2010 (3.3 per cent and 9.8 per cent respectively).
Residential development activity is clearly is not robust enough, he said.
When were facing a national housing undersupply of 200,000 homes, any dip in new residential building activity is unwelcome.
New residential building activity plunged in Queensland by 6.7 per cent, dropped in Tasmania by 5.1 per cent and in fell in NSW by 3.5 per cent.
On the other hand, new residential building soared in Victoria by 3.3 per cent, while South Australia and Western Australia saw minor increases – 0.9 per cent and 0.2 per cent respectively.
The drop in NSWs residential development was driven by an 8.4 per cent plunge in new houses, while medium and high density residential construction jumped by 2.5 per cent, buttressed by the state governments new stamp duty exemption for off-the-plan sales, Mr Gadiel said.
In contrast, Queensland saw falls in both new houses and higher density homes – 3.7 per cent and 11.7 per cent respectively.
Victorian new house building soared by 4.7 per cent, while its higher density development remained relatively flat at 0.1 per cent.
Mr Gadiel said that, of the states, NSW and South Australia suffered the largest drop in building activity (7 per cent), followed by Queensland (6.9 per cent), Western Australia (4 per cent), Victoria (0.8 per cent) while Tasmania saw a slight increase (0.7 per cent).
NSWs poor result comes from its poor performance in new houses and private sector commercial, retail and industrial building, he said.
Mr Gadiel said that todays figures showed there was no room for complacency by governments.
Australia is not yet on path to reducing its housing undersupply – the reform of development levies and planning laws is crucial if this is to change, he said.
More coherent investment by all levels of government in new urban infrastructure would act as a boost to commercial, retail and industrial development.
Mr Gadiel said that todays ABS figures also gave a full picture of the 2010 calendar year, and the relative performance of the states.
Overall, theres been a improvement on 2009s appalling figures, with an 11.5 per cent increase in building activity, he said.
Although this figure masks a 7.7 per cent fall in private sector non-residential building over 2010.
New residential building activity increased by 8.2 per cent over the year, with the increase in medium and high density dwelling constructing outstripping house construction by a factor of three – 14.5 per cent, compared to 5.4 per cent.
These residential numbers were buttressed by significant government expenditure on new public housing; the test for 2011 will be the response of the private sector to the drop-off in government home-building activity.
Mr Gadiel said Victoria and Queensland punched above their weight in 2010, accounting for 27 per cent and 22 per cent of Australias building activity, while they only made up 25 per cent and 22 per cent of the population respectively.
Of course NSW continued to perform poorly, compared with its population, accounting for just 24 per cent of building activity, but 32 per cent of the nations people, Mr Gadiel said.
NSW accounts for just 17 per cent of new house building, 28 per cent of new high density home building and 29 per cent of non-residential building.
Both sides of politics should be using the current NSW election campaign to address this issue and argue the case for planning reform, lower development levies and growth-orientated urban infrastructure investment.
Please note: Tables comparing the relative performance of each state are in the attached PDF below.
