Falling approvals highlighting stabilising residential construction market
New home approvals declined during June, falling by 5 per cent over the last month. However, approvals are still 16 per cent higher than they were 12 months ago, with a number of industry bodies stating this drop indicates a flattening and stabilising of the market. As a result this could be great news for those interested in building their own residential properties in the near future.
During June, there were 15,659 dwellings approved nationwide. Housing Industry Association Senior Economist Shane Garrett said that these falls are becoming more frequent, highlighting the possibility that the home building recovery has reached a peak and will simply begin to stabilise over the coming months.
"With interest rates at historic lows, the window of opportunity remains open for the supply of affordable housing to be significantly augmented in the near future. A greater push on this front by policymakers could ensure that the housing prospects for this generation of Australians are greatly enhanced," said Mr Garrett in a July 31 statement.
Between the states, there were some considerable differences in decline. Victoria was the only state to experience a rise in housing approvals, increasing by just 0.3 per cent over the month. On the other hand, Queensland saw a drop of 10.5 per cent over the month, followed by declines in Tasmania (9.0 per cent), South Australia (3.6 per cent), Western Australia (3.1 per cent) and New South Wales (2.1 per cent).
Mr Garrett also said factors like slow land release and barriers to the development of residential regions have been major problems for the growth of the market, with changes needed in the future in order to stimulate the industry.
These views are reflected by Wilhelm Harnisch, chief executive officer of Master Builders Australia, who said residential building should remain stable despite these drops, with confidence that the growth of the residential property sector will continue.
"We need to look beyond the monthly volatility in approvals for high-rise apartments, which saw a fall of 8.4 per cent seasonally of approvals for apartments down from the strong 25 per seasonally adjusted rise in May 2014," said Mr Harnisch in a July 31 statement.
"The softening of approvals for apartments is not unexpected given the exceptionally strong growth in the first half of this year. Overall building approvals will continue to improve but likely to be at a slower rate."
Regardless of whether you're looking for owner occupation or investment opportunities, now could be a great time to get in contact with a real estate agent and begin looking into your construction options.