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Housing approvals continue to slow

Australia’s long-running residential housing expansion is showing signs it will slow in coming months, as approvals for new dwellings begin to slide. Total dwelling approvals for the year-ended January 2016 were 10.1% higher than for a year earlier, but the month-on-month data shows total approvals slipping.

As the chart below displays, total year-end approvals peaked in October 2015 at 231,164 separate approvals. Subsequently they have fallen to 226,570 for the year-ended January 2016. 

fig10

To go straight to the dashboard and take a closer look at the data, click here.

Analysis of the data shows that coming months will see the total number of year-end dwelling approvals decline further.

On a month-on month basis, represented in the blue bars above, free-standing dwelling approvals in January 2016 (always the quietest month of the year), declined to 6,961 approvals, down 6.6% from 7,422 approvals in January 2015. 

Despite the rise of apartment approvals, construction and dwelling, free-standing houses still dominate. For the year-ended January 2015, they accounted for 55.9% of approvals and a year later, still accounted for 51.0% of the total. They remain the most important indicator of the health of the housing sector, particularly given the boom to over-supply to bust cycle driven by investors and developers in the apartment market.

The likelihood is that the downturn in approvals has commenced and will flow through to supply sectors, including forestry and wood products, later in 2016.

 

Posted Date: March 22, 2016

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