The number of new buildings in the construction pipeline has decreased over the last six months.

Data from the Australia Bureau of Statistics revealed that housing finance commitments in February for the construction of new dwellings were 14.1% lower than the same time last year.

“The pipeline of building work which had expanded over recent years has shrunk over the past six months as the volume of work entering the pipeline fell away,” said Tim Reardon, chief economist at the Housing Industry Association (HIA). “After five years of a sustained building boom, market confidence fell away in the later part of 2018 as dwelling prices corrected, adversely impacting all segments of the market. Investors and owner-occupiers are delaying purchase decisions and foreign investment has also fallen dramatically for numerous reasons.

“Our expectation is that the credit squeeze will ease over the course of 2019 and we are hopeful that this is an early sign that the fall in lending will be modest by historical standards,” Reardon said. “The home building industry has driven economic growth in Australia since the end of the resources boom. As the housing boom cools the industry will be reliant on a strong national economy to ensure that this is a relatively shallow downturn.”