On the face of it the latest housing starts from the Australian Bureau of Statistics were terrible, down 13.2% in the quarter ending September 31.
And some media reports and early analysis reflected that steep fall, pointing out that it was the worst fall since the December quarter of 2008 when the GFC was settling in.
But the reality is a bit different, things are not as bad, with a big fall in the volatile other private dwellings sector (home units, etc), the reason for much of the fall.
But new private dwelling starts were down 4.5% in the quarter, which isn’t good news.
Overall housing starts fell 13.2% to 39,999 units, seasonally adjusted, from an upwardly revised 45,379 units in the June quarter, the Australian Bureau of Statistics said yesterday.
That rise in the June quarter was estimated at 0.8% originally, yesterday that was revised up to a 2.1% improvement, which is a solid revision.
The median market forecast was for a 5% fall in dwelling commencements in the September quarter, but economists seem to have been caught short by a big fall in the other dwelling segment which reversed the big rise in the June quarter.
The seasonally adjusted estimate for new private sector house commencements fell 4.3% in the September quarter following a revised fall of 4.5% in the June quarter. The June quarter figure was originally an estimated fall of 3.9%.
And the seasonally adjusted estimate for "new private sector other residential building" fell 13.5% in the September quarter following a rise of 16.8% in the June quarter.
That was originally reported as a rise of 11.5%, so the revision for the June quarter was substantial.
As we have learned with the building approvals data, the other private sector dwellings component is subject to extremely volatile swings because they are based on council approvals.
Additionally, the actual commencements data is taken from builders across the board, including those erecting multi-unit developments.
So all it takes to produce a big swing up or down in a quarter is for a council or two to delay or put through approvals for several big developments, which then show up as a big fall, or a big rise in the next set of quarterly starts.
And there has also been quite a bit of wet weather in the quarter, especially in parts of Queensland and Victoria and around Melbourne.
Even though the Queensland building industry is not going gangbusters, it had four quarters of reasonable growth up to the September quarter when it turned negative.
Rain or a delay in getting development finance could have caused that.
More rain fell last month and this month, so the housing data for the December quarter looks like being affected, especially in parts of Queensland and NSW.
Stockland and Mirvac, two big private developers, have already told the stockmarket that September quarter starts and approvals were impacted by the wet weather.
Over the year to September total dwelling commencements rose a respectable 12.4%, seasonally adjusted.
Finally, the original figures included in yesterday’s release from the ABS underline the point that the housing sector is not as bad as the figures might suggest.
The ABS reported:
"The total number of dwelling units commenced rose 7.5% in the June quarter 2010, to 44,193.
"New private sector house commencements rose 5.2%, to 26,964. Of the states, Queensland and New South Wales had the largest positive movements of 20.4% and 18.4% respectively.
"New private sector other residential building rose 17.0%, to 11,891. Commencements in all states and territories rose this quarter except for South Australia.
"The total number of public sector dwellings commenced fell by 0.4% to 5,182. This follows a revised rise of 170.8% to 5,204 in the March quarter."
