Building activity data is released quarterly by the Australian Bureau of Statistics (ABS). The release includes substantial data including dwelling commencements, dwelling completions, dwellings under construction and dwellings approved but not yet commenced construction. It provides a valuable addendum to the monthly building approvals data, offering additional insight into what is and isn’t being built.
Over the December 2017 quarter, there were 52,641 dwellings that commenced construction, 29,038 of these were new houses and 23,150 were new units. New house commencements were +0.7% higher over the quarter and +0.7% higher year-on-year. New unit commencements were -11.7% lower over the quarter and -17.7% lower over the year. The first chart highlights that unit commencements across the nation are now in a clear declining trend which mirrors fewer new unit approvals coming through the pipeline.
Across the states and territories, commencements of new houses generally remains quite elevated albeit it is below its peak across each of the four largest states. For units, commencements have eased in all regions however, there has been a noticeable lift in Western Australia commencements over the past quarter.
The completion of dwellings remains elevated, particularly for units, however both houses and units are starting to trend lower. Of course, with fewer new houses and units commencing construction it is likely that completions will also trend lower. Over the quarter, 51,484 dwellings completed construction; 27,470 were new houses and 23,405 were new units. New house completions were -2.5% lower over the quarter and -2.9% lower year-on-year while new unit completions were -0.2% lower over the quarter and -20.4% lower year-on-year.
The above charts show completions across the states and territories. Western Australia in particular has experienced a substantial fall in completions of both houses and units. House completions remain fairly steady in most other states and territories. Unit completions are below their recent peaks in most states and territories but remain extremely elevated relative to long-term average levels.
Over the December 2017 quarter, 218,842 dwellings were under construction which was down slightly from 220,468 at the end of the September 2017 quarter. Of these dwellings under construction, 66,331 were new houses and 150,237 were new units. The number of new houses and units has drifted slightly lower over recent quarters but they each remain elevated. In particular, the number of units under construction is substantially higher than long-term average and is likely to result in elevated completions over the coming few years.
Across the states and territories the number of new houses under construction in trending higher in NSW, Vic, SA, Tas and ACT and trending lower elsewhere. These figures can be more volatile because houses typically have a faster build time than units. The number of units under construction is trending higher in NSW, SA and Tas while it is trending lower in the other states and territories. Despite value growth now slowing, a market like NSW is continuing to see record-high volumes of units under construction.
The number of dwellings which have been approved for construction but not yet commenced is at an historic high. At the end of 2017, 46,359 dwelling were approved but not commenced, of these, 11,807 were new houses and 33,776 were new units. With an increasing number of new projects being delayed or abandoned it is reasonable to expect that the number of dwellings approved but not commenced will remain elevated over the coming quarters.
Overall, commencements remain elevated but are easing and fewer projects that are approved are making it to commencement. Completions have eased a little but remain at historically high levels. The amount of stock under construction remains high, particularly for units. The heightened volume of new housing stock that remains under construction is likely to result in ongoing strength in completions over the coming quarters.