Building approvals remain strong

“The housing industry experienced a strong month of approvals to end the financial year, with the number of new home approvals rising 4.0 per cent in June 2018,” stated Tim Reardon, HIA’s Principal Economist.

ABS Building Approvals data was released and shows that the number of building approvals in June 2018 was 1.6 per cent higher than in same month last year.

“This increase in building approvals for the end of the financial year makes 2017/18 the third highest year on record for building approvals – after 2014/15 and 2015/16.

“This sustained boom in building activity is unprecedented.

“The growth in the number of new homes available is a major reason why house price increases have slowed over the past year.

“The affordability challenge can only be addressed by allowing the industry to grow to meet the demand for new housing. This includes making more residential land available and reducing the taxation burden on new housing.

“The strength of new home building in Victoria has been the largest driver of the national picture with approvals in that state rising by 16.0 per cent during 2017/18 – and surpassing the record performance of 2015/16. Even a 9.6 per cent drop on the month of June 2018 was not enough to offset the strong performance over the year.

“These strong conditions in Victoria are likely to moderate over the remainder of 2018 as the population growth rate slows and the pent-up demand for new housing in Victoria is met.

“South Australia has also experienced a strong year with approvals rising by 11.1 per cent over the year to June 2018, despite a decline of 15.9 per cent for the month of June 2018.

“Conditions are not as strong in all parts of Australia.

“Building approvals in NSW rose 3.0 per cent during June 2018 – but still fell back by 2.0 per cent overall during 2017/18.

“This result is consistent with other indicators showing that the market in NSW peaked toward the end of 2017.

“Western Australia and the Northern Territory have experienced one of the worst years on record with falls of 9.2 per cent and 25.8 per cent respectively, for 2017/18. Encouragingly, both of these markets have seen growth in recent months and hopefully this is a sign that they have passed the worst of their downturns.

During June 2018, Queensland (+37.7 per cent) and the ACT (+5.8 per cent) saw the largest increase in new dwelling approvals followed by WA (+4.8 per cent) and the NT (+4.8 per cent). There was also growth in Tasmania (+3.3 per cent) and NSW (+3.0 per cent). Building approvals fell by 15.9 per cent in SA during the month and were down by 9.6 per cent in Victoria.

S0urce: HIA