“The trend of a cooling housing market that has been evident throughout 2018 continued in July 2018 with a 5.2 per cent decline in building approvals,” stated Tim Reardon, HIA’s Principal Economist.
ABS data released shows that building approvals in July 2018 were 5.6 per cent lower than in the same month in 2017.
“The housing market has been cooling modestly since a peak late in 2017,” added Mr Reardon.
“The market is cooling for a number of reasons including a slowdown in inward migration since July 2017, constraints on investor finance imposed by state and federal governments and falling house prices.
“Finance has become increasingly difficult to access for home purchasers. Restrictions on lending to investors and rising borrowing costs have seen credit growth squeezed. Falling house prices in metropolitan areas have also contributed to banks tightening their lending conditions which have further constrained the availability of finance.
“An increase in interest rates charged by banks will accelerate the slowdown in approvals.
“In addition, a slowing in Australia’s population growth since June 2017 coincides with changes to visa requirements announced early in 2017. Since then Australia has experienced almost a year of slowing population growth.
“Irrespective of all of these negative influences, the volume of approvals for new detached houses have been tracking around their strongest levels in 15 years.
“Weaker conditions in a number of states have typically been overshadowed by strong activity in Victoria. With Victorian home approvals now showing signs of weakness we expect the national trend – of declining building approvals – will continue throughout 2018,” concluded Mr Reardon.
Total seasonally adjusted dwelling approvals in July in 2018 fell in New South Wales (-5.2 per cent), Victoria (- 4.6 per cent), Queensland (-6.0 per cent), South Australia (-26.5 per cent) and Western Australia (-14.7 per cent). Seasonally adjusted approvals increased in Tasmania by 13.6 per cent. In trend terms, total dwelling approvals in July 2018 increased by 4.5 per cent in the Northern Territory and in the Australian Capital Territory (12.2 per cent).