标签： Oceania

Australia’s already critical national housing shortage has deepened after new official data revealed a sharp collapse in new residential construction activity during the first three months of 2024, with industry leaders warning that recent federal budget policy changes will only worsen the sector’s headwinds and delay progress on the country’s ambitious homebuilding targets.

Fresh data published by the Australian Bureau of Statistics (ABS) this week shows that the pace of new home building stalled dramatically in the March quarter, months before the Albanese government unveiled its controversial tax changes for property investors in the May 2024 federal budget. Total new dwelling commencements dropped 11.2% over the quarter to just 48,012 new homes. The sharpest decline was recorded in high-density residential projects, where starts plummeted 19.8% to 19,116 units, while detached single-family home starts fell a more modest 3.5% to 27,658 properties.

While total completed housing projects remain 0.8% higher year-on-year despite the weak first quarter, the latest downturn has pushed Australia even further off track to meet its national Housing Accord target of building 1.2 million new dwellings between 2024 and 2029. To hit this goal, official projections require Australia to average 60,000 new housing starts per quarter — a benchmark the current construction activity is now falling well short of.

Industry economists say the current slowdown has been driven by a perfect storm of interconnected headwinds hitting the construction sector. Master Builders Australia chief economist Shane Garrett explained that rising borrowing costs, global supply chain disruptions linked to the ongoing conflict in the Middle East, soaring building material prices, and persistent skilled labor shortages have combined to drag down home building activity across the country. “Construction demand across housing, non-residential building and civil infrastructure projects have all been squeezed by higher interest rates,” Garrett noted.

The sector now faces additional uncertainty following the tax policy changes introduced in Treasurer Jim Chalmers’ latest federal budget, which was framed as a response to worsening housing affordability stress and rising economic inequality. The budget restructured two key property tax rules to shift investor capital away from existing home sales and toward new construction: it restricted negative gearing tax benefits exclusively to newly built properties, and replaced the longstanding 50% flat discount on capital gains tax (CGT) with an inflation-adjusted indexation system that includes a 30% minimum tax rate.

Master Builders Australia chief executive Denita Wawn warned that the sudden policy shifts have created widespread uncertainty across the industry that will further dampen investment and slow new project development. “The ABS figures show building activity remains below the level needed, and at the same time, builders are telling us that uncertainty created by the federal budget is affecting confidence and slowing investment decisions,” Wawn said.

“This uncertainty means some builders will think twice before proceeding with new projects. In some cases, projects may be delayed, scaled back or not proceed at all. Australia cannot afford policies that make it harder to attract investment into construction when we need to deliver more homes, transport infrastructure, schools, hospitals as well as energy and Olympic projects over the next decade,” she added.

Escalating military tensions between the United States and Iran have sent shockwaves through global commodity markets and rippled into Australia’s domestic sharemarket, leaving the benchmark ASX 200 in negative territory on Wednesday, with sharp divergence across key industry sectors. Fresh military action that began on Tuesday, when U.S. Central Command launched targeted air strikes against Iranian sites along the country’s coastline, has amplified uncertainty in the already volatile Middle East, a region that controls a large share of global oil transit through the critical Strait of Hormuz.

In a public statement posted to the social platform X, U.S. Central Command framed the strikes as a response to recent Iranian attacks on commercial shipping vessels carrying civilian crews in international waters, noting the operation was designed to impose clear costs for Tehran’s actions. A senior U.S. official confirmed Iran launched retaliatory strikes following the initial U.S. assault, creating a dangerous cycle of tit-for-tat violence that threatens regional stability.

The escalation immediately impacted global energy markets, pushing Brent Crude prices up to a two-week high of $76.58 per barrel. This sharp uptick in oil prices triggered mixed reactions across Australia’s benchmark index, which ended the trading session in the red despite a partial recovery from a deeper morning slump. The ASX 200 closed 18.80 points lower, a 0.21% drop that landed it at 8785.10, while the broader All Ordinaries index fell 25.40 points, or 0.28%, to settle at 8979.30. Against the U.S. dollar, the Australian dollar rallied to 69.36 U.S. cents by market close.

Against the overall market downturn, six of the ASX 200’s 11 industry sectors closed in positive territory, led by energy stocks that benefited directly from the rising crude prices. Major Australian energy producers posted double-digit and solid single-digit gains: Woodside Energy rose 3.22% to close at $28.87, Santos climbed 5.78% to $7.50, and fuel retailer Ampol gained 1.37% to finish at $34.78. Consumer staples were another bright spot for the market: supermarket chain Woolworths rose 1.22% to $39.90, rival Coles added 0.39% to $23.41, and drinks and hospitality operator Endeavour Group jumped 1.79% to $3.51.

These sector gains were more than offset by steep declines across mining and materials stocks, driven by falling commodity prices and investor jitters over prolonged high global interest rates. BHP Group shares fell 2.31% to $57.51, Rio Tinto dropped 2.55% to $163.85, and only Fortescue Metals bucked the trend with a tiny 0.11% gain to $18.40. Gold mining stocks also slumped as rising oil prices stoked fears that central banks would keep interest rates higher for longer, a trend that typically weighs on non-yielding assets like gold. Northern Star Resources fell 1.69% to $20.31, Evolution Mining dropped 4.19% to $11.44, and Newmont lost 1.04% to $136.18.

Tony Sycamore, senior market analyst at IG, explained that the latest conflict grows out of a long-standing unresolved dispute over sovereignty of the Strait of Hormuz, a chokepoint through which roughly 20% of global oil supplies pass each day. “Iran maintains that parts of the Strait fall within its territorial waters and that it exercises sovereignty over them, while the US position was that the Strait is an international waterway with rights of transit passage for all nations,” Sycamore said. “This fundamental difference in interpretation was never fully resolved in the text of any agreement.”

Beyond the geopolitical-driven volatility, several individual companies dragged on the index through company-specific events. Telecom giant Telstra saw its shares drop 2.96% to $4.92 following a nationwide network outage that disrupted more than 24.9 million mobile services, interrupted business payment systems, and shut down public transport networks across multiple Australian states. Furniture retailer Adairs fell 1.34% to $1.47 after it flagged a non-cash impairment charge of up to $60 million and projected a statutory after-tax net loss of roughly $43 million. Medical device company ResMed slipped 0.80% to $31.19 after announcing it had agreed to sell its MatrixCare software business to Frazer Healthcare Partners for $490 million U.S.

As Australia’s central bank holds the official cash rate steady, a wave of independent rate cuts from domestic lenders has upended the country’s mortgage market, driven by intensifying competition to win over home loan borrowers. In an unexpected shift that defies the Reserve Bank of Australia’s (RBA) June decision to keep the cash rate at 4.35%, 18 lenders have moved to slash variable home loan interest rates for existing and prospective customers, with several more cutting fixed rate offerings.

Data from finance comparison platform Canbar shines a light on the core dynamic driving this unconventional move: cutthroat price competition forcing providers to undercut one another to gain market share. “Competition among lenders continues to create opportunities for some households to cut their borrowing costs,” noted Sally Tindall, Canstar’s director of data insights. Tindall added that while negotiating a lower rate with a current lender can deliver modest savings, the largest reductions still typically come from refinancing a home loan with a new provider.

The most prominent cut highlighted by Tindall came from Bendigo Bank, which reduced its lowest variable rate for refinancing customers by 15 basis points, bringing the rate down to 5.89%. Following this round of cuts, 15 separate lenders now offer home loan rates below 5.9% — a threshold that was far less common just months earlier. Fixed rate home loans have also seen downward movement, with five lenders rolling out reduced fixed rate terms for new borrowers. AMP Bank led the fixed rate cuts, trimming some of its long-term fixed rates by as much as 50 basis points.

This wave of private sector rate cuts comes even as the RBA opted to hold the official cash rate at its June monetary policy meeting, with the board voting unanimously to keep rates steady despite inflation remaining well above the central bank’s 2-3% target. Recent official data from the Australian Bureau of Statistics puts annual headline inflation at 4.0% as of May, down slightly from 4.2% in April. The cooling of headline inflation is largely attributed to the Australian government’s temporary fuel excise halving, which drove an 11.9% drop in automotive fuel prices in May following a 7.0% decline in April.

However, core inflation — the RBA’s preferred indicator that strips out volatile price movements for items like fuel — tells a less encouraging story. The trimmed mean inflation rate rose 0.4% month-on-month in May, accelerating from a 0.3% increase in April, pushing the annual core rate to 3.6%. RBA governor Michele Bullock emphasized after the June rate decision that inflation remains unacceptably high, and left the door open for future rate hikes if necessary. “I want to be very clear that inflation remains too high,” Bullock said. “Rate hikes remained on the table if that is what is required to bring inflation down.”

The conflicting signals from inflation data have split economic experts over the RBA’s next policy moves, with forecasters divided between expecting extended rate holds, gradual cuts, and additional hikes to curb persistent price growth. HSBC chief economist Paul Bloxham expects the RBA will hold rates steady for a prolonged period, in large part due to a cooling housing market that is already expected to dampen consumer spending and ease inflationary pressure. “Although the RBA does not target housing prices, the housing price correction will have implications for monetary policy,” Bloxham explained. HSBC’s base case forecasts housing prices to decline in the second half of 2026, and fall 2-6% over the full 2027 calendar year. “At some level, the cooling housing market will be helpful for the RBA if it slows down consumer spending, as this will also help to take some more pressure off inflation, which is too high,” he added.

Three of Australia’s four largest major banks also predict rates will remain on hold until 2027, with only subtle differences in their outlooks. Commonwealth Bank projects the RBA will hold rates steady through the rest of 2026, though it acknowledges rates could rise if inflation continues to exceed forecasts. National Australia Bank expects the RBA to hold before starting gradual rate cuts in the second quarter of 2027, while Australia and New Zealand Banking Group forecasts two rate cuts will be implemented over 2027.

Westpac, the only major bank to break ranks, is forecasting two more 25-basis-point rate hikes before the RBA pauses for a 12-month period. Westpac chief economist Luci Ellis argues that persistent above-target inflation makes additional rate increases likely before the end of the year. “We still regard our two-hike track as the most appropriate base case view, given the inflation outlook,” Dr Ellis said in comments late last week. Ellis pointed to two key factors that could keep inflation higher than policymakers expect: lingering pass-through effects from recent fuel price increases to other consumer goods and services, and a larger-than-expected increase in minimum and award wages that could put upward pressure on broader labor costs. “If we are right about the inflation profile from here, the RBA will be surprised on the upside,” she added. “We therefore retain our view that further rate hikes will occur in the following meetings (in August and September).”