New home approvals set to fall from peak levels

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Residential property approvals have likely entered a downward cycle according to the Housing Industry Association (HIA).

Following a decline in January, figures released this week by the HIA show housing approvals jumped 3.1% in February, driven by a 7.7% surge in apartment approvals.

Approvals for detached housing fell 1% in the month.

HIA senior economist Shane Garrett said the overall February rise was a welcome one, however it appears approvals have passed their peak.

“The data for January showed that 2016 started on a rather sour for new home approvals. Today’s figures show that growth returned during February,” Garrett said.

The monthly lift in approvals activity during February is welcome but it seems increasingly likely that approvals peaked late last year and that the volume of new home building activity is set to ease as 2016 progresses,” he said.

Over the year to February, new dwelling approvals totalled 232,194, compared to 239,250 approvals in the year to October 2015.

Source: HIA

Garrett said the HIA predicts the coming year will see nearly a 10% fall in the number of new houses built in Australia.

“Our latest forecasts indicate that the about 200,000 new dwelling starts will take place during 2016, a reduction of 10%% from last year. This would still represent a very high level of output by historic standards.

“However, the risk remains that new home building output will fall below the levels required to meet long term demand. The onus remains on policy makers to tackle this problem, and confront issues like planning delays, land supply shortfalls and heavily inefficient taxes like conveyance stamp duty.”

During February 2016, total seasonally adjusted new home building approvals saw the largest increase in Tasmania (+24.5%) with growth also occurring in New South Wales (+14.3%) and Queensland (+9.5%).

 Approvals declined in Victoria (-12.8%), South Australia (-10.9%) and Western Australia (-7.6%).

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