The Australian Bureau of Statistics released its quarterly building activity data showing homes that began construction rose seven per cent in the June quarter to 52,201, while completions climbed 5.8 per cent to 47,168. Despite the uplift, the government's ambitious target of building 1.2 million homes over five years remains a key plank in its plan to address the housing crisis and aid first home buyers.
KPMG urban economist Terry Rawnsley said the uptick showed Australia was trending in the right direction, with a record number of more than 240,000 homes under construction expected to come onto the market over the next year. He noted that developers, facing softening prices and rising holding costs, are accelerating completions to get projects sold. However, Rawnsley warned that projects breaking ground now would be more expensive due to higher oil costs stemming from the start of the US's war on Iran. "This is probably as good as it's going to get for the foreseeable future," he said.
Housing Industry Association chief economist Tim Reardon offered a sobering assessment, stating that the 52,000 commencements in the quarter would not be enough to meet demand. "There hasn't been a material increase in the volume of new home building over the past decade, we're still building a similar volume ... despite the pick-up that we can see in today's data, it's about average for recent decades," he said. "We have not built enough homes in..." (the article cut off at that point).
The home building sector has been hit this year by a series of interest rate hikes, higher construction costs linked to the Middle East conflict, and uncertainty from housing tax changes announced in the May budget, which have yet to fully flow through into the figures.