According to the Australian Bureau of Statistics (ABS), the value of private residential construction work completed was $15.36 billion, and represents the lowest value of residential works completed since the September 2015 quarter, when it was $14.86 billion.
Just under $50 billion worth of construction overall was completed in the March 2020 quarter, a 6.5% slump compared to March 2019 in seasonally adjusted terms.
There has also been six continuous quarterly contractions in the volume of building work done.
The news comes after Prime Minister Scott Morrison yesterday outlined the Government's new 'JobMaker' program, which aims to slash red tape and boost funding for trades and skilled labour.
"It's an issue that has been a key topic of discussion amongst the premiers and chief ministers and myself," Mr Morrison said yesterday.
"If you've got a job in the residential construction industry, Michael Sukkar's [Minister for Housing] here, and Josh [Frydenberg] has been working on plans here."
Industry points to more stimulus as construction falters
Ordinarily, reductions in the Reserve Bank cash rate and wage growth have stimulated the construction industry.
However, the cash rate has found a floor at 0.25% and is set to stay that way for a while, and wage growth has been sluggish.
Last week, the Master Builders Association called for a $40,000 new home building grant, while the Property Council of Australia proposed a $50,000 grant to 50,000 purchasers of new homes.
More broadly, Commonwealth Bank has tipped house prices to fall by a third in a worst-case scenario.
Housing Industry Association chief economist Tim Reardon said construction figures will decline further as data is released for the June quarter.
“The residential building industry had already experienced a significant downturn before COVID-19 struck," he said.
"Leading indicators of home building deteriorated markedly in April and May which paves the way for activity to fall further as the year progresses
“Today’s data confirms that the decline in home building will detract from GDP growth in the March quarter of this year.
"The drag from falling home building activity will become more significant in the June quarter."
Westpac senior economist Andrew Hanlan also said as immigration and population growth slows, so too does the construction industry.
"New home building activity fell further, as anticipated – with the outlook for further declines in part due to the pandemic and the near-term hit to population growth," he said.
"The decline in overall construction work early in 2020 continues the downward trend since mid-2018, coinciding with the peak in home building activity."
The Government is expecting a 30% fall in net overseas migration this financial year, while next financial year it's tipped to fall by 85%.
Yesterday, Mr Morrison said Australia needs to welcome between 160,000 and 210,000 migrants per year to maintain its GDP-per-capita growth, indicating a technical recession is likely.
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