THE housing market is still in limbo as more data shows conditions will get tougher before a sustainable turnaround can be forecast.
And the sentiment is unlikely to improve when the first home owner grant, which is providing a base for home sales, finishes by the end of the year.
Dr Andrew Wilson, senior economist at Rider Levett Bucknall, said as a reflection of the dire sentiment, by the end of June the value of non-residential construction work, including apartments, was down by as much as $16 billion from last year's $60 billion.
Dr Wilson said while there would be signs of an uptick in the planning of real estate projects by the end of this year, there had been a sense that the stimulus packages and first home owner grant had acted as circuit-breakers that had caused a hiatus for the residential and non-residential markets.
"There seems to be no sign of a revival," Dr Wilson said.
Confirming the lack of joy for the direct residential sector were the figures released yesterday that showed that the national construction industry registered a further, and accelerated, decline in June, following a moderation in the pace of contraction over the previous three months.
In June, the seasonally adjusted, Australian Industry Group/Housing Industry Association performance construction index (PCI) fell by 4.3 points to 42.6, to remain below the critical 50 points no-change level for a 16th consecutive month.
House building activity contracted for a 17th consecutive month in June, with the sub-index registering 44, 1.3 points down on the previous month.
The PCI is a seasonally adjusted national index for activity, orders/new business, deliveries and employment within the housing industry.
HIA senior economist Ben Phillips said the June PCI, like the recent building approvals and new home sales data releases, suggested the impact of the first home owner grant was levelling. Prospects for growth over the rest of the year depend on the currently very weak investor and trade-up buyer markets.
Last week, government figures showed new home sales fell by 5.7 per cent in May, after rising by 1.2 per cent in April. Detached home sales decreased by 9.9 per cent in NSW.
Australian Industry Group associate director of economics and research Tony Pensabene said the PCI for June indicated that the construction industry continued to decline, albeit at a rate consistent with the slower pace of decline evident in recent months.
"The result also reflects the recent up-and-down nature of the index and, consistent with the rest of the economy, it is demonstrating the trend of getting worse more slowly," Mr Pensabene said.
Email a friend