Just short of $50 billion worth of major residential construction is taking place across the country. Much of it is in NSW & Victoria.
Whilst Queensland is attracting a lion’s share of new engineering & infrastructure-related construction – sparking a well-known economist to exclaim, on national breakfast TV I might add, that Queensland was “Australia’s powerhouse” – new residential construction remains lacklustre.
But hopefully for not for too much longer.
- There is $49 billion worth of new residential development currently under construction across Australia. This is up 3% on last year; yet down 5% from the previous market peak (in late 2010).
- As we have been saying in recent missive posts – we need more housing starts & renovations to help increase employment. This is especially the case given the recent layoffs & pending tight federal & state budgets.
- Three out of five dollars spent on new housing is currently being spent in either NSW or Victoria. Queensland attracts a 16% market share. Given its high population growth & recent underbuilding, Queensland should be hosting many more new housing starts.
- Yet, as the graphic above shows, residential construction volumes continue to head down in Queensland.
- Across the nation, new detached housing seems to be on the nose. So, too, are major renovations or conversions (those that need council approval). In contrast, new attached housing starts are on the rise.
- This switch in housing preference, especially from an investment & rental point of view, appears to be permanent one. But as we outlined last week, the pace of this switch has the potential to oversupply the new mid-to-high-rise apartment space, over the short to medium-term. Buyers considering this stock need to take a more prudent view, and should consider holding such apartment stock for more than one cycle (i.e. ten plus years) in order to reap sufficient financial reward.
STATS: Our quick grab of the recently released property-related statistics.
Michael Matusik will be presenting at the National Property and Economic Update seminar in Brisbane on 29th March. Click here now for full details and to reserve your seat.