New BIS Oxford Economics figures say Australia’s residential building boom is long gone and housing construction will fall 30 per cent from peak to trough over a two-year correction.
The forecast is greater than the 25 per cent decline in home build starts that has been recorded over the last nine downturns since the 1970s.
Despite this, home construction will still sit above previous troughs because of a higher base in housing construction due to strong population growth.
“It’s a big decline, but the trough is so much higher due to the higher underlying demand,” BIS managing director Robert Mellor told Australian Financial Review.
“I’ve never seen a cycle where we effectively had four years of dwelling commencements around 220,000 to 230,000. That was unbelievable.”
Housing starts dropped 16.3 per cent in the three months to December, the fastest quarter-on-quarter decline since 2000.
The greatest falls were in attached dwellings, those being apartments, townhouses and semi-detached homes.
CommSec senior economist Ryan Felsman says the boom has been dragged out by strong levels of development on projects signed off on years earlier but was now over.
“Australia’s residential property boom is well and truly over,” he told AFR.
“Property prices, housing finance, foreign investment and the amount of work entering the pipeline are all declining.”
There are hopes that while home building is falling, commercial construction and sustained infrastructure work in the eastern states will keep things moving for the industry.