New home construction continues to slide

There was a significant drop in the number of new homes and apartment buildings under construction in the final quarter of last year.

Bureau of Statistics data show the total number of new homes under construction fell 6.9 per cent in the December quarter of 2011 in seasonally-adjusted terms.

It also found the number of apartments being built plunged 13.9 per cent.

The result came on top of a decline of 5.8 per cent in the September quarter, downwardly revised.

Housing Industry Association senior economist Andrew Harvey says the apartment sector has fared worse than private home construction in the past year.

"You've had the removal of the last bits of the government stimulus flowing through in the public sector, and that's coming off as well," Mr Harvey said.

"The public sector does have a high degree of apartment buildings, so that's flowing through there." Mr Harvey says the figures should send a signal to the Reserve Bank on interest rates, after it kept the official cash rate on hold in February and March.

"They probably should have cut at the last meeting," he said.

"We've seen a pretty weak GDP result for the December quarter, and continuing signs that much of the economy isn't as strong as it should be, and some rate relief really is needed." Although the figures reflect activity from last year, TD Securities head of Asia-Pacific research Annette Beacher says they are a key leading indicator of construction activity, and this latest result does not bode well for the sector in the near term.

"While mining, business investment and exports as a share of GDP continue to surge, dwelling investment as a share of GDP in 2011 was 3 per cent, back to levels usually associated with an outright recession," Ms Beacher said in a note on the data.

View post:
New home construction continues to slide