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New housing activity slumps

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Final ABS figures released today confirm a disappointing update for new housing activity in the June 2011 quarter.

HIA chief economist Harley Dale said that seasonally adjusted residential building work done fell by 4.1 per cent to an annualised level of $45.3 billion in the June 2011 quarter.

“This final update for June quarter activity confirms a tale of two halves, with new home building activity continuing to deteriorate as major renovations activity climbs higher,” Mr Dale said.

“New residential building work done fell by 5.3 per cent in the June 2011 quarter reflecting a 2.0 per cent decline in detached housing and a drop of 11.0 per cent in other dwellings.

“Meanwhile the volume of major alterations and additions work done, which accounts for around 20 per cent of total renovations activity, increased by 2.6 per cent.

“Renovations activity, both in terms of major jobs which we received an update on today, and smaller jobs valued at less than $10,000, is the source of growth in the housing industry in 2011.”

According to Mr Dale, this situation reflects an inherently more cautious household sector post the GFC, together with the excessive taxation of new housing and very high stamp duty incurred when moving home.

“Substantial reform of the very high and inefficient taxation of housing, especially new housing, in Australia is a vital area for policy focus and cooperation across levels of government.”

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