The rate of increase in housing approvals appears to be easing with 235,337 separate units for the year-ended August 2016, a 1.9% rise on the prior year. While there has been growth across the board, apartments of 4+ storeys continue to dominate growth, rising 3.4% year-ended August.
The chart below shows Australia’s total residential dwelling approvals, by type. The striking thing about the chart is that for the year-ended August 2016, the number of 4+ storey apartment approvals had clearly grown, but perhaps more importantly, approvals of free-standing dwellings fell 1.4%, compared with the prior year. At 116,718 separate dwellings, free-standing houses accounted for 49.8% of total approvals for the year.
To go straight to the dashboard and take a closer look at the data, click here.
Although it is not alone, the strongest growth in dwelling approvals continues to be in New South Wales. Total approvals in New South Wales reached 73,677 dwellings for the year-ended August 2016 – a rise of 10.5% on the prior year. This big lift can be seen in the chart below, which demonstrates that despite Victoria’s growth in approvals of 1.7% over the same year, New South Wales now leads the nation’s dwelling approvals.
To go straight to the dashboard and take a closer look at the data, click here.
Inevitably, the strength in approvals in New South Wales is driven by 4+ storey apartments. It is difficult not to think about the essential laws of gravity – what goes up, must come down, eventually.
For different reasons, this can be observed in Western Australia, in particular. For the year-ended August 2016, that state’s approvals totaled 23,152 dwellings, 26.9% lower than for the prior year. We can thank the mining industry and thus, the global market for mineral resources, for the decline in Western Australia. The message is that external factors, some of them far removed, can have a very large impact on the housing market.
It is well understood that investors dominate the market for 4+ storey apartments and it is unclear if current levels of approvals will be sustainable. If oversupply were to eventuate then this could impact prices with potential flow on effects for loan and bank liquidity. Little wonder there is ongoing concern and regulatory action in the domestic housing market.
