New apartments volumes weakest since mid 2012: Shane Garrett

EXPERT OBSERVER

The volume of new apartment building is smaller than at any time since July 2012. 

Just released figures from the ABS show that new home building approvals lost another 8.4% during December 2018.

Detached house approvals were down by 2.1% but approvals for new apartments/units dropped by 18.6% during the month.

Today’s ABS figures complete the full 12-month picture for 2018. For the year overall, the volume of new home building approvals was pretty strong with over 212,000 permits issued for new dwellings.

This was down only modestly (-5.6%) compared with the 2017 total.

More worrying is the pace at which approvals have been falling back over more recent months.

During the final three months of 2018, total approvals were 23.7% lower than a year earlier – with apartment approvals suffering a 40.1% reduction over this period.

Faltering new home building activity has been occurring against the backdrop of falling house prices, the Royal Commission’s work and uncertainty about what housing policy will look like after May’s Federal Election.

Clearing up some of these uncertainties would help get the housing market back on its feet.

During December, new dwelling approvals increased in three markets including South Australia (+5.6%), the Northern Territory (+1.7%) and Western Australia (+1.1%).

The largest reduction in approvals hit Tasmania (-24.3%) followed by the ACT (-21.3%). The volume of approvals also declined in New South Wales (-8.6%), Victoria (-8.1%) and Queensland (-5.8%).

Shane Garrett is Master Builders Australia’s Chief Economist