IT was inevitable that there would be a fall … people across Sydney observed how quickly developments were thrown up … and questioned the quality of construction …
Despite a media largely on side … the stories began to appear of the black money awash in Australian Real Estate as the Proxies outbid Australian First Home Buyers at auctions …
Then we learnt of the student, family, 10 year and investment Visas luring foreign buyers with the offer of permanent residency …
BUT then China’s capital controls struck and the Ponzi market died!
HOWEVER the NSW Premier appears unperturbed … shrugging off the defective build crisis … and that home buyers are gunnin’ for the guvmnt …
IS she confident there will be a revised industry of RECTIFICATION?
And tradies can perhaps cut back their ‘Neuro Surgeon fees’ and do maintenance and renos for us, the ‘not so flush’ …?
Property sales tumble leading to prediction of ‘100,000 job losses’
By Shane Wright
July 30, 2019
The economy and jobs market is facing a testing few months with fresh evidence the residential construction sector is still struggling, with warnings 100,000 construction workers could lose their jobs.
The Australian Bureau of Statistics on Tuesday reported a 1.2 per cent drop in building approvals across the country last month, led by a 5.4 per cent fall in NSW.
While there was a small lift in approvals for houses, up by 0.4 per cent in June to be down by 14.8 per cent over the past 12 months, approvals of units and apartments slumped 6.5 per cent in the month.
Approvals in the apartment sector have now fallen by 39.3 per cent over the past year with last month the worst June performance since 2013. Some of the biggest drops have been among unit blocks four storeys or taller, with approvals of these in NSW down 50 per cent over the past two years.
Analysts had been tipping a lift in approvals which are now tracking at a level that suggests a small but growing chance of a national shortfall in housing construction based on current population growth.
Separate figures from the Housing Industry Association highlight the troubled property market.
In the just-completed financial year there were a net 56,357 house sales across the country. It was the lowest annual number in records that go back to the 1991 recession.
In NSW, house sales fell to 10,220, a 15 per cent drop from 2017-18 and a fresh record low. Victoria fared better with 22,337 house sales in 2018-19 although this was down 11.5 per cent on the previous year.
Figures due on Thursday from CoreLogic are expected to show a slight lift in house values in July, particularly in Sydney and Melbourne.
UBS senior economist George Tharenou said while the recent cuts in interest rates and loosening of credit standards would likely help lift house prices, residential construction was set to continue contracting.
He said investment across the sector was expected to fall by 10 per cent and that in turn would lead to serious job losses for construction-related businesses.
“Our tracking of construction job ads is consistent with 100,000 job losses ahead,” he said.
“Given this, we expect the RBA will cut rates by a further 50 basis points to 0.5 per cent with 25 basis point cuts in both October and February 2020.”
BIS Oxford Economist economist Maree Kilroy said interest rate and income tax cuts may not be enough to stop a further drop-off in residential construction.
“Despite recent stimulus measures, the downwards trend in houses is set to continue over the remainder of 2019 given the weakness in land sales and the lag to the approval stage,” she said.
*”Risk to the downside for the apartment market remains with apartment pre-sales remaining weak and build quality concerns escalating.”
Ben Jarman, senior analyst with JPMorgan, said the annual falls in approvals looked “ugly”. Since the peak in 2017 they have fallen by 56 per cent.
He said it appeared real residential investment had fallen by almost 2 per cent over the past quarter which would detract 0.1 percentage points from the June quarter GDP result, which will be released in early September.
“The trajectory of the approvals data into third quarter suggest a similar drag for that quarter, though with dwelling prices doing a little better lately there could still be some moderation in the pace of decline for approvals in coming months.”
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.