The decline in residential building work will “compound the contraction in Australia’s Gross Domestic Product in the June quarter,” according to HIA Senior Economist Geordan Murray.
The total value of residential building work done declined by 5.5 per cent in the June quarter, and is down by 12.1 per cent compared with a year ago.
Mr Murray notes that the total value of such work dropped to the lowest level seen since 2014 during the June quarter, a statistic that he says can only “partially” been attributed to COVID-19.
“Most of the building work done during the June quarter was ongoing work on homes that were under construction at the onset of the shut-down,” Mr Murray explained.
“The majority of residential building sites around the country were able to continue operating during the initial COVID-19 lockdown by implementing on-site social distancing measures.
“However, the pipeline of new sales came to an abrupt halt during this period.
“The drop in sales between March and May created a real risk that the decline in the amount of residential building work would have accelerated sharply in the September and December quarters.
“The HomeBuilder program created an incentive sufficient for home buyers to return to the market. In most markets, the lift in sales throughout June and July has made up for the drop in of sales during the lockdown.
“The residential building industry was two years into a cyclical downturn when COVID-19 struck and home building activity is expected to deteriorate further over the next two years.
“The HomeBuilder program has been effective in averting a rapid deterioration in home building in 2020 but businesses are still preparing for the challenges that lie ahead,” Mr Murray concluded.
