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House building activity declines for first time in 16 months

by Nick Bendel9 minute read
The Adviser

Economists expect a healthy supply of new homes this year despite a fall in construction activity at the end of 2014.

The Performance of Construction Index, which is compiled by the Housing Industry Association and Australian Industry Group, fell to 44.4 points in December 2014.

The index was at 45.4 points in November 2014 and 50.8 in December 2013, with readings below 50 points indicating a fall in activity.

The sub-category of house building activity experienced its first monthly fall since August 2013, declining from 51.8 to 46.3 points between November and December.


Apartment building activity dropped from 58.0 to 43.7 points to sink to its lowest level since August 2013.

Australian Industry Group chief economist Julie Toth said housing and apartment building lost momentum in late 2014 although the signs still look good for this year.

“In housing, new orders look to have stabilised after growing strongly for much of 2014,” Ms Toth said.

“This stability bodes well for the pipeline of work that will commence in the all-important new housing sector in 2015.”

Housing Industry Association economist Diwa Hopkins said new home building would “remain elevated” in 2015, even if below the record level experienced in 2014.

“Strong growth in new home building had been buoying not only Australia’s construction sector, but also the wider economy throughout 2014,” Ms Hopkins said.

[LinkedIn: What should the government do to help first home buyers?]

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