Home building past its peak

Adam Smith 20 June 2016

house values downThe peak for home building has passed, a bank analysis has found.

A team of Citi analysts believe residential construction activity will decline this year, reported the Australian Financial Review. The analysts came to the conclusion after polling 22 builders in Victoria, New South Wales and Western Australia.

“Overall outlook remains positive, though steadily moderating, with expected activity levels and market sentiment and confidence levels declining from that of the previous year,” the analysts wrote in a note to clients, according to the AFR.

The poll found 64% of builders expect to build more homes in the coming 12 months, compared to 63% last year. However, of those expecting to build more homes, nearly 65% expect to build 10% more. The comparable figure last year was 39%, the AFR said.

New home sales past peak

“While residential activity is growing, there are signs of slowing growth, implying peaking of the construction cycle,” the Citi analysts wrote.

The poll also found the number of builders who believe they will build more than 25% more homes fell to 14%, down from 19% a year ago.

The poll also surveyed builders on their concerns about the year ahead. It found builders were most concerned by economic uncertainty at home and abroad, followed by government and political leadership and rising house prices.

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