In the latest twist to a long-running rivalry, new housing statistics show that Melbourne is on track to overtake Sydney as the nation’s premier city.
Victoria has toppled New South Wales as the nation’s leading state for housing construction and home loan approvals according to a report by the Housing Industry Association, Australia’s peak residential building body.
HIA’s “housing scorecard” provides a twice-yearly state by state performance review of residential building and home loan activity across Australia.
For the past three years NSW has dominated the scoreboard, ranking as the best-performing state in 10 out of 12 quarters.
Now the tables have turned, with Victoria outpacing NSW—still the nation’s most populous state—throughout the first half of 2018, in key metrics including the home loans approved for first-home buyers.
Last year the Victorian capital’s population swelled by 125,424, the largest annual increase of any city in Australia’s history.
Currently home to 4.7 million people, Melbourne’s population is tipped to break five million by 2021 and soar past eight million by 2050.
Demographers predict the Victorian capital will overtake Sydney as Australia’s most populous city by 2030.
One in 10 Victorian workers are employed in the construction industry, the largest share on records since the early 1980s.
In the May 2018 quarter, the construction workforce reached 331,000, 17.6 per cent higher than a year earlier and is 33 per cent higher than the state’s decade average, HIA said.
However there’s a risk that the boom could turn to bust if demand drops.
“The growth in the Victoria’s construction workforce is a strong point for the state but this could become an area of vulnerability,” the report said.
The post-mining boom home values crash shows that construction work is “highly cyclical” and the workforce is “prepared to move where the work is”, HIA said.
“If it turns out that the pro-cyclical nature of construction investment has disproportionately fuelled the state’s economic growth at the expense of other sectors, then the state could be left exposed in the event of slowing construction activity.”
New South Wales remained the nation’s strongest-performing market for detached house building, leading the scoreboard in both detached house approvals, and for the number of detached homes currently under construction.
When it came to units, there were more than 66,000 under construction at the end of March, nearly double NSW’s decade average.
South Australia jumps ahead
South Australia jumped ahead in the rankings, moving up to third spot on the leaderboard, SA’s highest ranking since 2010.
HIA attributed the jump to SA’s appetite for renovations, and a recent focus on medium-density housing.
“Favourable policy settings have skewed the new housing mix more towards the multi-unit market,” HIA said.
“Multi-unit approvals in the June quarter were essentially double the state’s decade average, commencements were 91.1 per cent higher than the decade average and the number of multi-unit dwellings under construction is 76.4 per cent above the state’s decade average.”
However, lending to first-home buyers was down, with the number of loans for first-time buyers 17.3 per cent below the state’s decade average for the June quarter.
“This may be the weakest first-home buyer market in the country,” HIA said.
Queensland, Tasmania, ACT, WA and NT
Queensland, Tasmania and the ACT came in middle-of-the-pack “well off the pace” of NSW and Victoria, followed by the Northern Territory and Western Australia.
“Tasmania’s economic revival has seen a resurgence in population growth and this is evident with the growth in the construction workforce,” HIA said.
“Pressures have emerged in the state’s housing market and the lift in approvals provides a positive sign for residential building activity.”
WA and the NT remain the nation’s “fading stars”, HIA said.
“The home building markets in both jurisdictions shined brightly during their respective economic booms but they now languish at the bottom of the league table,” the report said.
“WA has now ranked as the weakest residential building market in the nation for eight consecutive quarters. But the tough conditions in the NT market might soon see WA’s dire run come to an end.”