A fall int the contribution from housing construction to Gross Domestic Product in Australia means the slowing market in new home building is impacting the wider economy, a property industry leader says.
Data from the Australian Bureau of Statistics indicates that the economy overall grew by a modest 0.5 percent during the June quarter and has grown by only 1.4 percent over the past year.
Slowing in home building activity was a significant drain on the overall result.
All up, dwelling investment fell by 4.4 per cent in the June quarter, and was down by 9.1 per cent over the year.
This led to a 0.2 percentage point subtraction from the June quarter GDP result.
Property Council of Australia chief executive officer Ken Morrison said the data showed that slower home building activity was affecting the broader economy.
“We’ve been highlighting the potential impact of a slowdown in housing construction on economic growth for some time, and this is now clearly showing up in the June quarter GDP result,” Morrison said.
“Recent signs that housing prices are stabilising are welcome and important for consumer confidence, but housing construction is the critical driver of investment and jobs and this is falling.
According to Morrison, slower building approvals (down 24 percent over the past twelve months) means that the pipeline of work in new home construction is slowing.
Whilst stronger housing prices may support a recovery in construction activity down the track, he says construction in new home building will continue to slow for now – a phenomenon he says will weigh on economic growth and employment well into 2020.
Morrison called on governments to ensure that appropriate policy settings were in place to support new home construction.
He says access to finance is the biggest issue for purchasers at the moment.
Any action which governments could take to ease pressures in this area would be welcome.
As well, it was important to mitigate against the risk of future shortages in supply and the consequences for housing affordability.
This includes ensuring that state and territory governments have appropriate policies in terms of tax, planning and land supply.