Construction down 2%, but new home builds and renovations are up

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on November 25, 2020
Construction down 2%, but new home builds and renovations are up

The latest data indicates just over $17.2bn of residential construction was done in the third quarter, down 1% on the previous quarter.

According to the Australian Bureau of Statistics (ABS), the value of construction work done overall was a touch over $51 billion, down 2% in seasonally-adjusted terms.

The only state or territory to record an uptick in construction over the quarter was the Northern Territory, up in value by 3.9%. 

New private sector houses built were up in value 1%, from $8.56 billion to $8.65 billion over the quarter in seasonally-adjusted terms.

Renovations and additions - including conversions - in the private sector were also up 4.56% in value over the quarter, from $2.25 billion to $2.35 billion.

Building a home? The table below features construction home loans with some of the lowest interest rates on the market.

Lender

Variable
More details
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green

Green Construction Home Loan (Interest Only)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
UNLIMITED EXTRA REPAYMENTS
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
UNLIMITED EXTRA REPAYMENTS

Basic Home Loan (Principal and Interest) (LVR < 60%)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
100% FULL OFFSET ACCOUNT
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
100% FULL OFFSET ACCOUNT

Offset Package Home Loan (Principal and Interest) (LVR < 60%)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
100% FULL OFFSET ACCOUNT
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
100% FULL OFFSET ACCOUNT

Offset Package Home Loan (Principal and Interest) (LVR 60%-70%)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
100% FULL OFFSET ACCOUNT
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
100% FULL OFFSET ACCOUNT

Offset Package Home Loan (Principal and Interest) (LVR 70%-80%)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Fixed
More details
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green

Tailored Investment Loan Fixed (Principal and Interest) 1 Year

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Fixed
More details
  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green

Fixed Rate Investment Loan (Principal and Interest) 1 Year (LVR > 80%)

  • Interest Only during construction
  • No monthly, annual or ongoing fees
  • Get Australia’s lowest rate construction loan when you go green
Variable
More details
  • Fast turnaround times, can meet 30-day settlement
  • No ongoing fees
  • Unlimited extra repayments

Construction Home Loan (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • No ongoing fees
  • Unlimited extra repayments

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *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. Rates correct as of August 10, 2022. View disclaimer.

Westpac senior economist Andrew Hanlan said this was weaker than market expectations.

"The point estimate of -2.6% was weaker than the market (median -2%), albeit not as soft as Westpac (-3.8%)," he said.

"The key surprise, housing declined by less than anticipated ... renovations, often volatile, rebounded."

However, Mr Hanlan said the "key take-out" out of construction data was that "the Australian economy rebounded solidly as COVID restrictions were eased."

"The construction data is one of the quarterly partials ahead of Q3 GDP [gross domestic product], to be released on December 2," he said.

Second quarter GDP figures confirmed Australia was in a recession, down 7% - the highest quarterly fall on record (data goes back to 1959).

Two consecutive quarters of GDP growth, on the other hand, implies Australia is out of a 'technical' recession.

How does HomeBuilder factor in?

Housing Industry Association economist Angela Lillicrap said construction work done was at its lowest level since 2014, but did point to a couple of green shoots in the sector.

“This data precedes the positive impact of the HomeBuilder program due to the lag between purchasing a house and commencing construction. It does reflect the impact of the restrictions on activity including the Victorian shutdown period,” she said.

“With the outlook for a strong new home building market and a strong renovations market, employment within the sector will grow into the new year."

A boost in private renovations and home builds have not necessarily led to keeping tradies in jobs, with insolvencies in the past fortnight up in the construction sector by 6.25%, according to the Australian Financial Security Authority.


Photo by Henry & Co. on Unsplash



Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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