Apartment market still booming as commencements hit record mark

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The first three months of 2016 was a record breaking period for Australia’s apartment market as it hit a new high for building commencements.
Analysis of Australian Bureau of Statistic (ABS) data by CoreLogic has revealed apartment commencements rose to a record breaking 29,987 over the March 2016 quarter.
In comparison, the number of detached housing commencements fell for a second straight quarter to 25,122 over the three-month period.
According to CoreLogic’s analysis, unit commencements hit record highs in New South Wales and Queensland and also saw significant increases in South Australia and the ACT.
Detached house commencements rose in South Australia, Tasmania and the Northern Territory but fell in all other jurisdictions in the three moths to March.
The increase in unit commencements during the March quarter also helped push the total number of dwellings under construction to record levels.
At the end of March there 215,863 dwellings under construction nationally, with 152,449 of them being units and the 63,414 being detached houses.
The total figure is 18.6% higher than the number of dwellings under construction as of the end of March 2015, with the number of units under construction up 32.6%, while the number of houses under construction fell 5.4%.
But while the number of dwellings under construction increased, the March quarter saw a decline in completions.
Over the quarter, the number of unit completions fell to 15,0002, while detached house completions fell to 23,218. Completions for houses fell across each state and territory over the quarter while for units, they were lower over the quarter in all states and territories except for NSW and SA.
CoreLogic research analyst Cameron Kusher said its likely completion numbers will continue to fall as oversupply concerns take hold in the apartment sector.
“There is the concern of over-building in certain areas especially considering in certain locations much of the new unit supply in particular is targeted at an investor rather than owner-occupier market,” Kusher said
“We would expect that over the coming quarters an increasing proportion of dwellings, particularly units, which are approved for construction will not be commenced.  This is largely due to challenges with securing enough presales to trigger commencement of these projects,” he said.
As of the end of March there was also a further 8,817 houses and 24,175 units approved for construction but had not yet commenced.

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