HIA: Building approvals could reach all-time high
Buyers take note - residential building approvals are through the roof this year.
According to statistics gathered by the Housing Industry Association (HIA), building approvals could reach an all-time high in 2014. The flood of new homes to come will relieve first time buyers and others trying to get their foot in the market.
Seasonally-adjusted building approvals reached 188,153 in the preceding year up to March 2014. To place that into perspective, this is higher than previous peaks during the years up to April 2000, May 2004 and October 2010, which saw building approvals shoot up to 179,721, 183,825 and 182,446 respectively. It is only marginally lower than the historical highs of 189,140 in May 1989 and 194,237 in October 1994.
The average growth rate over the preceding quarters of the recovery in building has been 4.6 per cent, inching up by 0.7 per cent this last quarter.
Approvals rise across the board
Every state and territory experienced some growth in approvals, other than the Northern Territory. New South Wales saw the biggest increase, at 42. 9 per cent, with ACT and Tasmania following close behind in the 30s.
South Australia saw a rise of 26.6 per cent, Western Australia an increase of 25.4 per cent, Victoria a 23.3 per cent growth rate and Queensland experienced an 18.5 per cent uptick.
NSW was also going strong in terms of its contribution to aggregate annual growth. It provided 10.3 per centage points, nearly half of the 26.6 per cent average. This is timely and appropriate given that the state, and Sydney in particular, is set to expand dramatically in terms of population over the next few decades, due to birth rates and the large numbers looking at buying a property in the area.
Other notable contributions to the growth rate was Victoria, with 6.7 per centage points, Western Australia and its 4.2 per centage points and Queensland, with a respectable 3.6 per centage points.
Detached houses, 4-storey units drive growth
Detached houses continued to make up the chief proportion of new approvals, representing 58.6 per cent of total approvals. While slightly under their 10-year average of 65.3 per cent, this is still a substantial number.
But representing a shift in composition of new home building, it is multi-dwelling units, particularly units in buildings with four storeys or more, which are what the HIA refers to as the "overwhelming driver of growth" in building approvals. These made up a 24.5 per cent of total approvals this quarter, well over its 10-year average of 15.3 per cent.
Savvy buyers would do well to take advantage of the unique real estate opportunity these developments present.