New home building activity has surged in the June quarter, pointing to a long-anticipated recovery in residential building activity.
New residential building work rose by 7.7 per cent in the June 2010 quarter, ABS figures showed yesterday.
With affordability tight for first time buyers, increased building activity can translate into less competition for housing as there is more stock on the market. This in turn can result in a drop in upwards price pressure.
According to the Housing Industry Association's (HIA) senior economist Andrew Harvey, the figures confirmed a first stage recovery in new home building was starting to flow through to real building activity.
“Excluding alterations and additions, new residential building is up 8.7 per cent in the June quarter 2010, which is the fastest rate of growth since the September quarter 2001,” he added.
The surge in activity came off the back of fiscal stimulus and lower interest rates, Mr Harvey said, but whether the recovery would be sustained would remain to be seen.
In any case, the short term outlook was promising, he said, with around $27 billion worth of residential building in the pipeline – the highest level since September 2008.