Summary: The housing construction cycle has reached elevated levels, with dwelling approvals climbing above the long-term average as well as most historical cyclical highs. But while it has been in an upwards trajectory since 2012, we aren’t calling a peak nor forecasting a crash. Rather, the later stages of the cycle should have longer durations than previous cycles due to accommodative monetary policy and the increase in the lag time between approvals, commencements and completions of buildings.
Key take-out: Brickworks is our preferred exposure within the mid-cycle housing construction cycle. For the late cycle GWA Group also screens as an interesting, though we are yet to do sufficient analysis to make a formal recommendation.