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Surprise Increase In Building Starts

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“The number of new homes commencing construction in the June quarter increased by 1.1 per cent, the first increase since December 2017,” said Tim Reardon, HIA Chief Economist.

The ABS released building activity data for the June quarter of 2019. Despite a small improvement in new home starts in the June quarter, they remain 20 per cent lower than against the same period a year ago.

“The increase in total starts was due to a 21 per cent lift in multi-unit starts, mainly in NSW and WA. Detached housingstarts have slowed to their lowest level since December 2013,” added Mr Reardon.

“More recent data informs us that the downturn in detached home starts has slowed. The impact of three cuts to interest rates and small fiscal stimulus has slowed the decline in work entering the pipeline. “The slowdown in building activity over the past 18 months has adversely affected the national economy and has been one of the main drags on GDP growth.

“A return to normal lending conditions would provide a boost to homebuilding and the wider economy.

“Indications are that the downturn in new projects entering the pipeline are starting to improve following cuts to interest rate but the market is not yet at the bottom of this cycle. Annual housing starts during the 2018/19 financial year fell in all states and territories, with the exception of the Australian Capital Territory (+17.8 per cent) and Tasmania (+5.3 per cent). The largest annual fall was recorded in the Northern Territory (-28.4 per cent), followed by South Australia (-22.6 per cent), Victoria (-17.8 per cent), Western Australia (-14.3 per cent), Queensland (-13.9 per cent), and New South Wales (-13.1 per cent).”

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