Housing Starts Inch Up, Industry Calls for Accelerated Reforms – Sydney Auction Clearance Rate at 66%

Week’s Key Focus

Recent research indicates a slight increase in housing starts for the March quarter, driven by a 4.8% rise in private house starts, as a key industry lobby group urges more action on reforms.

According to the Australian Bureau of Statistics (ABS) data, total home commencements rose by 0.5% to 39,715 homes, with new private sector house starts up by 4.8% to 25,072 homes. However, since March 2023, house starts have fallen by 6.7%. New private sector other residential starts (such as apartments and townhouses) fell by 3.1% to 14,071 homes, after a 3.3% rise in the December quarter. Annually, these residential starts have decreased by 21.5%.

The value of total building work completed during the quarter fell by 3.5% compared to the previous quarter, amounting to $33.4 billion. The number of homes completed during the quarter was down by 9.51% compared to the previous quarter and fell by 8.1% year-on-year. Private sector home completions declined by 16.9% compared to the previous quarter and were down by 8.8% year-on-year. Other residential completions rose by 11.2% for the quarter but dropped by 8.2% annually.

Seasonally adjusted, the value of total building work done in the March quarter fell by 3.5% to $33.4 billion. Non-residential building work saw the largest decline, dropping by 6.8% to $13.8 billion, following a 6.7% increase in the December quarter. Work done on new residential buildings fell by 0.8% to $16.9 billion and is 1.2% lower for the year. Work on alterations and additions to residential buildings fell by 2.6% to $2.7 billion. In New South Wales, housing starts declined to 43,136 homes, down from 49,206 in the 12 months to March 2023.

Tom Forrest, Chief Executive of the Urban Taskforce Australia, stated that the data indicates rising construction costs and ongoing uncertainty and delays in finalising planning reforms have led to a “cliff” in housing starts in NSW over the past 12 months. Forrest emphasised that the housing data sends a strong message to the Minns government: it must work harder, faster, and bolder in planning and housing reforms to inject more certainty and confidence into the property development and construction sector. “We need to see more applications, more approvals, more new home commencements, and more dwelling completions. Right now, all the metrics are heading south,” Forrest said.

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Auction Results Last Week

Sydney: 621 properties were auctioned, with results reported for 390; 259 were sold. The clearance rate was 66%, with total auction value of AUD 310,682,300 and a median house price of AUD 1,465,000.
Melbourne: 785 properties went to auction, with results reported for 519; 304 were sold. The clearance rate was 59%, with total auction value of AUD 247,834,451 and a median house price of AUD 889,000.