Aussie Dwelling Starts Rise In March Quarter

Helen Kevans
Economist
J.P. Morgan Securities Australia Limited

Aussie dwelling starts rise 1.3%q/q in March quarter

Dwelling commencements surged 1.3%q/q in the March quarter, after rising just 0.6% (revised up from -0.8%) in the previous three months.

The gain largely was concentrated in starts of other residential building (+5.3%q/q), while commencements of new private sector houses fell (-0.9%).

There was a massive disparity in dwelling commencements across the nation.

Dwelling commencements were up a staggering 56.3%q/q in the Northern Territory, while Queensland was the only other state to post a gain - a comparatively mild 2.5%. Elsewhere, dwelling starts fell over the quarter: Victoria (-4.9%), South Australia (-3.7%), Western Australia (-4.6%), Tasmania (-3.4%) and the ACT (-52.8%).

After trending lower following their March 2004 peak, dwelling starts have now increased for three consecutive quarters, taking the trend estimate for total dwelling units to +1.0%q/q in 1Q 2007, up from +0.2% in the three months to December.

That said, amid expectations that interest rates will soon rise, coupled with near-record low housing affordability, the uptrend in total dwelling starts likely will be short-lived. Housing starts will total around 138,500 in 2007, compared with 152,000 last year.

* The total number of dwelling units commenced rose 1.3%q/q following a revised 0.6% increase in 4Q.
* New private sector house commencements fell by 0.9%q/q after a revised increase of 0.1% in 4Q.
* New private other residential building rose 5.3%q/q, accelerating from a revised increase of 1.4% in 4Q.

ENDS

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