Building woe grows

Construction industry hits six-year low

AUSTRALIA’S construction sector is shrinking at its fastest rate in six years, dragged down by weakness in housing, major industry groups say.

And the home loan market is still struggling as the number of loans offered to owneroccupiers slides, official statistics show.

But there are signs of green shoots in property as auction clearance rates bounce back in the wake of the federal election last month, according to a property research house.

In a report yesterday, the Australian Industry Group and Housing Industry Association said the construction sector was contracting at its fastest rate since 2013.

The performance of the construction index, which is updated each month based on polling of companies in the sector, fell 2.2 points to 40.4 for May. Readings below 50 indicate the sector is shrinking.

The house-building sector has been shrinking for 10 months.

Housing Industry Association economist Tom Devitt said: “Housing market sentiment improved in the weeks following the federal election but it is still too soon for any improvement to translate through to activity on the ground.”

Meanwhile, the Australian Bureau of Statistics said the value of total mortgage lending, excluding refinancing, rose a slender 0.2 per cent in April to $17 billion, seasonally adjusted. It followed a 3.3 per cent decline in March.

The number of new loans granted to owner-occupiers fell 1.1 per cent in April, below market expectations. But the value of owner-occupier loans outstripped expectations, up 1 per cent to $12.6 billion.

In a separate analysis, RiskWise Property Research noted auction clearance rates had risen in recent weeks.

CoreLogic figures showed clearance rates dipped to about the 50 per cent mark before the election, but Melbourne’s preliminary rate had since recovered to 66.1 per cent and Sydney’s to 64 per cent.