New research today revealed residential construction completed in March 2020 fell to its lowest level since September 2015.
According to the Australian Bureau of Statistics (ABS), the value of private residential construction work completed was $15.36 billion, and represents the lowest value of residential works completed since the September 2015 quarter, when it was $14.86 billion.
Just under $50 billion worth of construction overall was completed in the March 2020 quarter, a 6.5% slump compared to March 2019 in seasonally adjusted terms.
There has also been six continuous quarterly contractions in the volume of building work done.
The news comes after Prime Minister Scott Morrison yesterday outlined the Government's new 'JobMaker' program, which aims to slash red tape and boost funding for trades and skilled labour.
"It's an issue that has been a key topic of discussion amongst the premiers and chief ministers and myself," Mr Morrison said yesterday.
"If you've got a job in the residential construction industry, Michael Sukkar's [Minister for Housing] here, and Josh [Frydenberg] has been working on plans here."
Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.
Base criteria of: a $400,000 loan amount, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the product provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 03 July 2020. View disclaimer.
Industry points to more stimulus as construction falters
Ordinarily, reductions in the Reserve Bank cash rate and wage growth have stimulated the construction industry.
More broadly, Commonwealth Bank has tipped house prices to fall by a third in a worst-case scenario.
Housing Industry Association chief economist Tim Reardon said construction figures will decline further as data is released for the June quarter.
“The residential building industry had already experienced a significant downturn before COVID-19 struck," he said.
"Leading indicators of home building deteriorated markedly in April and May which paves the way for activity to fall further as the year progresses
“Today’s data confirms that the decline in home building will detract from GDP growth in the March quarter of this year.
"The drag from falling home building activity will become more significant in the June quarter."
Westpac senior economist Andrew Hanlan also said as immigration and population growth slows, so too does the construction industry.
"New home building activity fell further, as anticipated – with the outlook for further declines in part due to the pandemic and the near-term hit to population growth," he said.
"The decline in overall construction work early in 2020 continues the downward trend since mid-2018, coinciding with the peak in home building activity."
The Government is expecting a 30% fall in net overseas migration this financial year, while next financial year it's tipped to fall by 85%.
Yesterday, Mr Morrison said Australia needs to welcome between 160,000 and 210,000 migrants per year to maintain its GDP-per-capita growth, indicating a technical recession is likely.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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