Housing construction sees sharp decline

Adam Smith 8 September 2016

new home building hits new recordA steep fall in home building has dragged down the national construction industry.

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index saw a steep fall in August. The index was down five points to 46.6. Readings below 50 indicate a contraction in construction activity.

The sector was weighed down by a steep fall in housing construction, down 13.8 points in August. The result was partially offset by growth in apartment building, which was up 8.8 points to 56.8 after contracting in July. Commercial construction and engineering construction also saw rises. The fall for housing construction follows a three month period of growth.

“We’re at the peak of the residential construction cycle, but the Australian PCI suggests there is not enough non-residential activity coming along behind,” Housing Industry Association chief economist Harley Dale said.

Dale called new home construction the “kingmaker” of the Australian economy, and accused policy makers of failing to respect its importance.

“When new home construction inevitably peaks by 2016/17, people will look to a plan for further growth. Right now there seems to be nothing, because housing is the convenient bedrock and nobody has the vision to look beyond the short term," Dale said.

The HIA has previously forecast three consecutive years of declines for new home building.

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