New home starts past their peak

Commenting on the results, HIA senior economist Shane Garrett noted that they represent the second consecutive quarterly decline in new dwelling starts, with a “substantial portion” of the reduction occurring on the multi-unit side.

Multi-unit commencements fell by 3.9 per cent, while detached house starts only dipped by 1.8 per cent compared with the previous quarter.

“Detached house starts have been holding up quite well. The upturn in new home building between 2012 and 2016 was heavily influenced by increased apartment building with output more than doubling,” Mr Garrett said.

New home building is set to move lower over the next few years, according to Mr Garrett, who expects that the higher density market will “have to absorb” the bulk of the reduction.

“From a peak of over 230,000 starts during 2015/16, we anticipate that new home starts will continue to ease over the next couple of years and bottom out at around 172,000 during the 2018/19 financial year,” he concluded.

During the September 2016 quarter, only NSW (+5.4 per cent) and Queensland (+6.3 per cent) saw increases in new dwelling commencements.

Meanwhile, the ACT saw the largest decline with new dwelling commencements declining by 39.6 per cent, followed by South Australia (-20.0 per cent).

Western Australia and Victoria also posted reductions of 13.6 per cent and 9.6 per cent respectively.

Falls in new dwelling starts also occurred in the Northern Territory (-7.6 per cent) and Tasmania (-0.6 per cent) during the quarter.

[Related: Apartment building to drop by 40% by 2018/19]