House approvals surge while apartments cool

The volume of approvals for new detached houses is at its strongest in 15 years according to HIA’s Senior Economist Shane Garrett.

Building approvals data released recently shows that over the three months to April 2018, a total of 31,562 new detached houses were approved for construction, the most in any three-month period since 2003.

“The performance of the detached house building market is remarkable,” Mr Garrett said.

“The volume of house approvals during the three months to April was 9.9 per cent higher than a year ago, a time when it was already elevated.

“Strong demand for new houses is being sustained by healthy rates of population growth – itself a product of robust labour markets in Australia’s largest cities, while it’s a virtuous circle for detached house building at the moment, there are risks on the horizon.

“It appears that the banking Royal Commission has already led banks to increase their scrutiny of mortgage lending.

“If this results in a protracted disruption to the mortgage market then there are likely to be ramifications for the home building industry.

“After posting a strong end to 2017, approvals for multi-units cooled by 9.4 per cent over the three months to April but it is still comparable with this time last year.

“The apartment market remains under pressure due to the stiffer tax burden on foreign buyers in most states as well as tighter regulatory conditions.

“These interventions represent a real risk for the house building industry,” Mr Garrett concluded.

The ACT saw the largest expansion in new dwelling approvals during April 2018 with an increase of 39.2 per cent compared with a year earlier.

Over the same period approvals grew in Victoria by 25.8 per cent while in Tasmania they were up 15.2 per cent and South Australia had a slight increase of 1.9 per cent.

Building approvals fell in four markets over the year to April being Queensland down by 11.5 per cent, the NT by 6.6 per cent, NSW by 5.4 per cent and WA 3.0 per cent down.