The latest figures on new homes reinforce other data showing Australia currently making close to the worst economic progress in the Western world. It doesn’t help that the Coalition has virtually abandoned public housing, reports Alan Austin.
Permits for new dwellings in the financial year ended in June came to a total of 188,250. That sounds quite a lot. But it was 44,726 fewer than the year before, and a thumping 50,406 fewer than three years ago. It was also fewer than in 1988-89 during Paul Keating’s reconstruction of Australia’s economy.
The percentage decline in the last year over the year before was 19.2%, the worst annual decline since 2000-01 at the depths of the early 2000s global recession.
Construction data deconstructed
New housing data has been released monthly since 1983 by the Australian Bureau of Statistics (ABS) in file 8731.0, Building Approvals, Australia. The ABS separates private sector construction from government, and houses from other dwellings such as blocks of flats and high rise apartments.
Private sector houses declined 9.7% in the year ended in June from the previous year. The number – just 110,015 – was the lowest since 2012-13, towards the end of the global financial crisis (GFC). Private sector dwellings other than houses dropped a staggering 29.9% last year from the year before. That is the worst decline in 23 years.
Public sector dwellings, including both types, declined 17.9% year on year. The number – a puny 2,416 – was the lowest on record by far. The second lowest was 2,722 in 2011-13, and the third lowest 2,779 in 2016-17, when Scott Morrison was Treasurer.
This confirms the Coalition has virtually abandoned public housing, a high priority – and a strategic economic stimulus measure – of most previous governments.
The average number of public housing dwellings built annually by the Keating Government was 8,514. Through the Howard years, this dropped to 4,346. The Rudd and Gillard period, most of which was impacted by the GFC, averaged 6,402.
In stark contrast to these, the average under the Coalition – during an unprecedented global building boom – is just 3,060.
There is a credible case that global conditions for new home construction in 2019 are the best in seventy years. Interest rates are extremely low, loan capital is available, building technology is advancing, unions are weaker than they used to be and international trade is freer than ever – Donald Trump notwithstanding – which moderates costs.
Most well-managed economies are taking full advantage of these strong global tailwinds and enjoying a new housing boom. Poland has seen building approvals increase for seven consecutive months, Greece for the last five months, and the Bahamas for the last four.
Current data on new housing approvals is available at tradingeconomics.com for 41 free enterprise economies.
The USA, Chile, the Czech Republic and Taiwan enjoyed increased new home approvals in July over June, and increases in four or five of the last six months.
The Netherlands, Germany, New Zealand, Belgium, Luxembourg, Croatia, Latvia, Estonia, Jordan, Macedonia, Kenya, Qatar and South Africa have all had rises in the latest month over the month before. Canada, Honduras and Slovenia have seen strong rises for the last two months straight.
Sweden, Lithuania, Montenegro, Austria and Bulgaria, which report quarterly, have all reported higher building permits in the second quarter of this year over the first. Albania has seen strong quarterly rises in five out of the last six quarters.
So these are global boom times for house construction. Except for three dismal laggards.
Australia is the only country among these 41 in which housing starts have declined in five out of the last six months. Also lagging are Portugal and Israel, with four of the last six months in reverse. But neither has housing outcomes as poor as Australia’s.
Forward to 2019-20
Here comes the scary part. We now have ABS housing permit numbers for July and August, which indicate how things are travelling in the new financial year.
Total dwellings approved in those two months are just 25,782, a dramatic drop of 25.1% on the number for the same two months last year. That’s the lowest for July and August in seven years. It is the lowest relative to population on record. So there is no sign of any turnaround, despite the benign conditions.
Whole economy in decline
The last financial year was one of the worst for Australia’s economy, with deteriorating outcomes on jobs overall, youth unemployment, productivity, wages, interest rates, retail sales, GDP growth, federal debt, interest paid on the debt, net worth, the value of the Aussie dollar and the welfare safety net. The loss of wealth due to record exports being shunted out of the country with little or no return to the budget – or the people of Australia – is now at an all-time high.
These outcomes are particularly shameful given the global conditions still prevailing with continuing growth in investment, trade, jobs, corporate profits and government revenue.
In fact, it is these powerful global tailwinds which have masked the disastrous mismanagement of Australia’s economy. As an example, Australia’s ranking on jobs has slipped from 16th in the OECD two years ago down to 20th today. Appalling! But the jobless rate has actually improved from 5.5% to 5.3%. Thanks to the global boom.
Role of the media
Again, these dreadful outcomes will seldom, if ever, be mentioned by the mainstream media. The compact – or is the quid pro quo? – is secure. The big media corporations will not disturb the management of the economy and the Government will not disturb their freedom from the obligation to declare profits fully and pay the required taxes.
Of course, if the corporations did pay appropriate tax on actual profits, along with fair wages, there would be plenty of revenue for new housing.
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