This article is from the Australian Property Journal archive
The volatile apartment sector has offset a rise in housing approvals, according to figures from the Australian Bureau of Statistics.
According to the ABS, total dwelling units approved fell 12.6% in August as a result of a 36.9% fall in the apartment sector. Meanwhile, private sector house approvals rose 1.1%.
On year on year basis, total dwelling approvals remain 2.1% higher when compared to August 2005 and the housing approvals are now 7.5% higher.
The volatile apartment sector is 9.1% lower when compared to August 2005.
ANZ Bank’s head of financial system analysis Paul Braddick said the sharp retracement in other dwelling approvals was widely expected given the sharp rises experienced in previous months.
“In contrast, private sector house approvals continue to recover slowly, indicating the underlying strength of the housing market. New dwelling approvals remain considerably below underlying demand and the housing sector is tightening as evidenced by falling rental vacancies.
“We expect the August rate rise will continue to weigh on building approvals in coming months and a further rate hike expected in November will delay any meaningful recovery in building activity until mid-to late 2007,” he added.
Braddick said in the meantime, underlying housing market fundamentals will continue to tighten significantly, setting in place the preconditions for a marked housing upturn in 2007-08.
HIA’s executive director of housing and economics Simon Tennent said overall, dwelling approvals were holding up but the usual suspects of higher interest rates and falling home buyer confidence would result in another year of weak home building activity in most states.
“For some states, supply constraints are evident, particularly in the provision of affordable zoned land however in the higher priced states of New South Wales and Victoria, demand has been affected by high mortgages and household budgets that are being stretched by higher petrol prices.
“Today’s figures are still in line with HIA’s home building forecasts of another weak year ahead however the unstoppable force of housing demand brought about by overseas migrants and household formation will see a sustained upturn in home building gathering momentum in 2008,” he added.
On a state-by-state basis, seasonally adjusted approvals fell in all five of the largest states. The largest fall was recorded in Western Australia, down 16.6% followed by Victoria, down 14.5%, Queensland, down 14.3%, South Australia, down 11.1%, Tasmania, down 10.9% and New South Wales, down 1.2%.
By Kathryn O’Meara
