The raft of federal and state stimulus measures pushed house building picked up to its busiest pace in more than three years in October, even as apartments, commercial and infrastructure remained subdued.
A key index of building activity of detached homes jumped 4.4 points to 61.3 – further above the benchmark 50-level, indicating faster growth – while a separate sub-index for new house orders, an indicator of future activity, soared 11.9 points to 67.1 points, the highest-ever level for that measure.
“The expansion of the Australian construction industry in October was driven by further strength in house building and smaller declines in the apartment and engineering construction sectors while commercial building fell further behind,” Ai Group head of policy Peter Burn said.
“With activity restrictions in Victoria now easing and new orders rising strongly across the country, the near-term outlook is encouraging.”
The headline Ai Group/Housing Industry Association performance of construction index 7.5 points to 52.7, above the benchmark 50 level – indicating growth – for the first time since 2018.
In all states except Victoria, housing is once again stepping in to hold up the economy, supported by a widening raft of publicly funded support measures. This week the federal government opened its first home loan deposit scheme to applications to help an additional 10,000 people buy or build a home – on top of the 20,000 places already taken up – following an announcement in last month’s budget.
“This acquisition allows us to continue leveraging our competitive advantage in the area,” says Stockland’s general manager of residential for Victoria, Mike Davis.
Other measures such as the federal government’s $688 million HomeBuilder program and various state schemes are showing up in other measures tracking the housing market.
Official figures earlier this week showed new home loans rose at their fastest rate in 3½ years in September. In WA, where incentives to buy new homes are the greatest, new loan commitments for owner-occupiers jumped 24.7 per cent from August to $1.8 billion, the state’s biggest total since June 2014.
The newly rediscovered enthusiasm for property buying is not yet boosting the apartment development sector, but the contraction in that part of the industry appears to be slowing.
The monthly index, based on the balance of survey respondents who say conditions are improving and who those say they are worsening, showed apartment building activity rose by 3.7 points to 47.1 points in October, indicating a further slump in activity, but with the pace of decline slowing. This measure has been in negative territory – below 50 – since early 2018.
“Apartment building activity retreated at a rapid pace in Q2 and Q3 due to the COVID-19 crisis and the reinstatement of activity restrictions in Victoria and state border closures elsewhere,” the report accompanying the index said.
“Large apartment building sites continued to work at a slower pace in October due to travel restrictions between states, physical distancing
and PPE requirements on site.”
The forward-looking apartment new orders sub-index improved by 4.8 points to 46.9 points.
Commercial construction activity deteriorated faster in October, with that measure dropping 6.4 points lower to 39.5 points. Engineering construction activity engineering activity index improved, with that sub-index rising by 14.6 points to 44.1 points.