- Residential construction in Australia hit the highest level on record in the June quarter.
- However, a variety of housing market indicators are now weakening, hinting the boom has now past its peak, at least in the current cycle.
- Job ads for construction workers are now falling, adding further evidence to support this view.
Residential construction in Australia hit the highest level on record in the June quarter, according to the national accounts released today.
However, it looks like that may well have been the peak in the current cycle.
Here’s further evidence to support that view, adding to the myriad of other housing indicators that continue to weaken at present.
From Macquarie Bank, using data from jobs website Seek, it shows the number of construction roles advertised on the group’s porthole over the past five years.
After steadily increasing between 2013 to 2015, demand for construction workers boomed in 2016, coinciding with a sharp lift in home prices in Sydney and Melbourne as the RBA cut rates and the impact of the initial round of macroprudential tightening of lending standards by APRA began to wane.
That undoubtedly encouraged a pickup in residential investment, leading to the surge in demand for construction workers.
However, it now looks like unprecedented residential construction boom in now starting to wane, both for houses and apartments.
New home sales, according to the HIA, have fallen 6.1% in 2018 compared to the same period a year ago. And building approvals, a lagging indicator to new home sales but a leading indicator for construction activity, have also softened, falling 5.6% in the year to July.
As such, demand for construction workers, as indicated by the chart, also looks to have peaked for this cycle.