Record year for housing approvals

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Figures released yesterday have revealed just how strong Australia’s recent residential construction boom has been.
 
The figures from the Australian Bureau of Statistics show that 2015 saw a record number of new homes approved for construction, with total housing approvals increasing by more than 13% compared to 2014.
 
The surge in approvals was not spread equally among housing types, with the apartment sector easily outstripping detached houses in terms of growth.
 
“During 2015, a total of 232,078 new homes received approval for construction. This is 13.7 per cent higher than 2014’s remarkable result and is head and shoulders above every calendar year on record,” HIA senior economist Shane Garrett said.
 
“However, the expansion during 2015 was not balanced across the market segments. While multi-unit approvals saw growth of 30.2%, detached house approvals inched up by just 1% during the year,” Garrett said.


Source: HIA/ABS

The increase in approvals for the apartment sector likely adds weight to concerns that are already being voiced about supply levels across the country.

NAB yesterday predicted apartment prices would fall by 1.2% nationally this year, with oversupply one of the main contributors.

While 2015 was a strong year for the construction industry, Garrett warned the current cycle is nearing its peak.

“[The] data are proof of an exceptional 2015. More importantly, they add to the body of evidence pointing to the start of a downturn in activity. During the December 2015 quarter, total approvals fell by 4% compared with the previous three month period and multi-units
accounted for a disproportionate share of the decline,” he said.

“New home building has been a crucial support to economic growth over the past two years, particularly in light of the mining investment downturn. The challenge during 2016 will be to manage the transition to lower volumes of new home building in an orderly fashion.”

While Garrett has a relatively cautious outlook for the year ahead, others are more buoyant.
 
“The December building approval data confirms that confidence among new home buyers and investors remains strong, underpinned by the continuation of low official interest rates,” Wilhelm Harnisch, chief executive officer of Master Builders Australia, said.
 
“The industry expects new house building activity to remain buoyant for the rest of 2016, particularly if interest rates stay at the current low settings,” Harnisch said.
 

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