Australian housebuilding ends 2015 on a high

Melbourne, Australia Photo: Arriba

Housebuilding in Australia ended 2015 on a high, reveal new figures, as construction activity for homes apartments returned to growth.

Construction of houses rose 4.6 points in the Australian PCI index in December 2015, a turnaround from two consecutive months of decline. The rate of apartment growth slowed by 14.7 points, the slowest rate of growth in six months.

Nonetheless, both residential sector ended 2015 “on a high note”, says Ai Group Chief Economist, Julie Toth.

“At a national aggregate level, this is being outweighed by the strength of the current contraction in engineering construction activity,” she notes, as commercial construction has “failed to register any meaningful growth through much of 2015”.

“Looking ahead, the downturn in new orders across all four construction sub-sectors in December is of concern for 2016,” she adds, predicting that the peak in apartment construction activity may arrive earlier in 2016 than expected.

HIA Economist Geordan Murray adds: “The Australian PCI result for December 2015 reaffirms the view that conditions for residential building, in both the house and apartment building, look set to soften in 2016. The Australian PCI activity sub-indexes show that both house building and apartment building expanded in December 2015, which reflects the ongoing work on projects that are already in the pipeline.”

However, “new projects may not be entering the pipeline as quickly as existing work is being completed,” adds Murray. “Nevertheless, there is still a very large volume of residential building work yet to be done which should sustain an elevated level of activity throughout the first half of 2016.”