Apartment approvals collapsing in Victoria and New South Wales: Chris Johnson
The Australian Bureau of Statistics (ABS) housing approval numbers for January 2019 show a collapse in apartment approvals in Victoria and NSW.
The ABS January 2019 housing data indicates a fall in apartment approvals in Victoria of 55 per cent and in NSW of 41 percent over the last year.
Detached home approvals have remained steady but apartment approvals have dropped dramatically across Australia but particularly in NSW and Victoria.
In January 2018 Victoria had 3362 apartment approvals but this has dropped to only 1,500 in January 2019.
NSW had 3,359 approvals in January 2018 and this has dropped to 1,987 a year later in January 2019.
The drop in apartment approvals in NSW is even more dramatic when measured against the high point of 3,814 approvals in September 2017.
This is a drop of 1,827 from the peak which is a 48 per cent drop.
Drops in the order of 50 percent over a year are highly unusual and it does not look as though the drop is slowing.
Over the last year house approvals dropped from 2,556 in January 2018 to 2,425 in January 2019 which is only a 5 per cent drop.
Clearly the investor market is on hold in the major cities as housing prices fall and this impacts on apartment sales.
The message from the development industry is that pre commitment sales have tapered off dramatically in Sydney so even those apartments that have been approved may not proceed.
The supply chain of new apartments is looking to be very low in the years ahead.
The collapse in approvals for new apartments has been fuelled by negative attitudes about apartment development from politicians and media in the build up to the NSW election on 23 March, the slow -down in funds from China, the falling dwelling prices in the market and a general lack of confidence by investors, owner occupiers and the development industry in new residential property.
Which ever party wins the NSW election will need to address the confidence issue quickly as there are around 300,000 direct jobs in residential development and if half the number of apartments will be built in coming years then half the number of jobs will be needed.
The Urban Taskforce is developing a series of actions that the next NSW government can take to minimise unemployment in the industry.
CHRIS JOHNSON is the Urban Taskforce CEO
