Australian housing approvals enjoy positive start to 2017

Approvals for new homes in Australia started 2017 on positive footing, with activity growing in the multi-unit sector.

Data from the ABS show that a slight expansion in building approvals occurred during the month of January. During January 2017, total dwelling approvals increased by 1.8 per cent. This was the result of a 6.6 per cent expansion in multi-unit dwelling approvals – while detached house approvals actually fell by 2.2 per cent during the month.

“New dwelling approvals have been falling back over the past year, particularly due to a reduced inflow of new multi-unit projects,” comments HIA Senior Economist Shane Garrett. “With new dwelling approvals falling back from record highs during 2016, new home commencements are set to decline during 2017. The latest HIA forecasts released today indicate that new dwelling starts are likely to contract by 11.8 per cent in 2017 and by 13.4 per cent during 2018 – largely due to considerably weaker activity on the multi-unit side.”

“Even so, new dwelling starts are likely to bottom out at around 174,000 per year – still a significant amount of activity by almost any standard,” he adds.

Total seasonally adjusted new home building approvals experienced the largest increase in New South Wales (up 24 per cent), followed by Tasmania (6.6 per cent), South Australia (6.5 per cent) and Western Australia (3.5 per cent). During the month, new dwelling approvals saw the biggest fall in Queensland (down 11.9 per cent) followed by Victoria (5.3 per cent). In trend terms, approvals experienced a 2.2 per cent decline in the Northern Territory with a reduction of 19.3 per cent in the ACT.

 

Home building in Australia to step down a gear

10th March 2017

Home building in Australia will step down a gear in 2017, following a record year.

“2016 will long occupy a special place in the history of Australia’s residential building industry,” says Shane Garrett, Senior Economist at the Housing Industry Association. “New dwelling starts hit an all-time high of 228,230 during the year – the culmination of the longest housing upturn since the end of WWII.

However, a combination of acute residential land shortages in key markets, along with restrictions on investor financing and a slowdown in population growth, will combine to ease residential building activity, predicts the HIA.

“Even though we saw new dwelling starts reach record levels during 2016 on a national basis, the geographic pattern of activity is still strikingly uneven. Four of the eight states actually experienced falls in new home starts last year,” says Garrett, predicting a decline particularly in the high-rise apartment sector.

“Even though new dwelling starts will decline over the next couple of years, the annual volume of new home starts is not likely to fall below 173,000 at any stage,” he continues. “By any standard, this is still a very robust level of activity.”

 

New build approvals rebound in Australia

9th January 2017

Approvals for new homes in Australia rebounded at the end of 2016, capping off a record year for house-building.

The volume of approvals for new dwellings bounced back in November by 7 per cent, according to the Housing Industry Association, after October saw a decline in approvals. On an annual basis, approvals remained 4.8 per cent below November 2015, but the figures marked a good month at the tail end of an extremely healthy year.

In November 2016, the largest increase in seasonally-adjusted dwelling approvals occurred in Western Australia (+24.4 per cent), followed by Victoria (+9.4 per cent) and South Australia (+7.1 per cent). The volume of approvals also rose in Tasmania (+5.2 per cent) and NSW (+5.1 per cent), while in Queensland, dwelling approvals fell by 4.6 per cent during the month. In trend terms, approvals declined by 5.1 per cent in the NT and were down by 3.4 per cent in the ACT.

“November was a particularly good month on the multi-unit side of the market with approvals increasing by 17.3 per cent during the month following a big fall in October,” notes HIA Senior Economist, Shane Garrett. “Detached house approvals declined slightly by 0.4 per cent during November. However, over recent months the detached house side of the market has been considerably more stable than multi-units.”

Construction activity for residential property is anticipated to remain elevated for most of the coming year, although the industry is expecting a gradual downturn in 2017, which Garrett says is “likely to be felt on the ground towards the end of this year”.

 

Lending for new homes holds steady in Australia

11th November 2016

Lending to households building and purchasing new homes held steady at a relatively high level in September 2016, according to Australia’s Housing Industry Association.

In total, there were 34,428 loans to owner occupiers purchasing homes during September 2016, according to the latest ABS figures, which is up by 0.5 per cent on the level recorded in August, although it is 7.8 per cent lower than the number recorded in the same month last year.

“The total number of construction loans and loans to households purchasing new homes has remained stable over recent months. The total is slightly below the peak levels reached in late 2015 and early 2016, although remain very strong and consistent with the high level of new home building occurring,” says HIA Economist, Geordan Murray.

“The level of lending to households buying new homes was similarly steady during the month. The number of construction loans fell by 0.3 per cent in September, and was down by 3.3 per cent down on the level recorded year ago. Lending activity in this part of the market reconciles quite well with indicators tracking the new home building activity. It is likely that the new home building cycle peaked in 2016 and that we’ll see activity moderate as we progress through 2017.”

 

New home sales continue climb in Australia

2nd November 2016

New home sales in Australia have risen two months in a row. According to the Housing Industry Association, new home sales rose 3.8 per cent in September, building on the 2.9 per cent growth recorded in September.

Detached house sales drove the increase, with transactions up 3.8 per cent month-on-month, while sales of units eased back by 0.8 per cent over the same period. Indeed, the figures follow data from the ABS that highlighted detached homes as Australia’s srongest sector within the house-building industry.

“However, the mix of available indictors suggests that new home building activity has now passed its peak and that the 2015/16 financial year will not be matched in terms new dwelling starts,” comments HIA Senior Economist, Shane Garrett. “This is particularly the case for multi-residential sales, which have eased by 6.2 per cent during the September 2016 quarter compared with the same period a year earlier.”

In the month of September 2016, detached house sales fell in four out of the five states covered by the report, an exact reversal of the situation in August. During September 2016, the largest fall in sales was recorded in South Australia (-23.0 per cent), followed by Western Australia (-17.2 per cent), New South Wales ( 12.9 per cent) and Queensland (-2.6 per cent). Victoria was the only state to record an increase in new home sales over this period with 14.0 per cent growth in sales over the past year.
 

Detached homes drive house-building Down Under

17th October 2016

Detached homes are driving house-building in Australia, as they reach a fresh peak in the June quarter.

Detached house commencements increased by 6.9 per cent in the June 2016 quarter, according to the latest ABS figures for new dwelling commencements. The increase was primarily driven by a jump in Victoria, although all three of the large east coast states recorded strong results which contributed to this being the strongest quarter for detached house commencements since early 2010.

In contrast, the number of “other dwellings” commenced (primarily multi-unit dwellings) declined quite sharply, falling by 23.6 per cent in the June quarter. While this was certainly a large decline, the fall occurred after an all-time record high was reached in the March 2016 quarter.

“New home building confirmed its number one spot in Australia’s domestic economy in 2015/16, with a healthy June quarter helping deliver a record fiscal year of 229,404 new dwelling commencements,” commenst Housing Industry Association Economist – Geordan Murray. “Given its strong multiplier impact through to many other sectors – including manufacturing and retailing – new home construction clearly delivered huge economic dividends to the Australian economy in 2015/16. The volume of new residential work done alone generated a record $58.5 billion of economic activity last financial year, before even considering the massive punch provided to other sectors of the economy.”

In the June 2016 quarter, new dwelling commencements increased in Western Australia (9.6 per cent) and South Australia (1.4 per cent), but fell in Queensland (-15.2 per cent), Tasmania (-13.9 per cent), New South Wales (-13.7 per cent) and Victoria (-8.2 per cent).
 

Australian home construction remain “unquestionably strong”

28th September 2016

Housing approvals in Australia remain “unquestionably strong”, according to new figures, which show that July saw highest number of permissions granted in capital cities since October 2015.

In Sydney, there were 54,667 dwelling approvals over the past year, up 7.3 per cent year-on-year. In Meblbourne, there were 57,428 dwellings approvals, down 0.2 per cent year-on-year, although this was driven by a 7.9 per cent drop in the number of apartments built.

Despite repeated warnings around apartment oversupply and settlement risk, the number of dwellings being approved for construction across the capital cities remains unquestionably strong.

In July 2016 overall, there were 17,380 capital city dwelling approvals, the third highest monthly number of capital city dwelling approvals on record.

“Despite a recent slowdown in capital city dwelling approvals there was a substantial rebound in July 2016,” notes Cameron Kusher, Head of Research at CoreLogic. “There have now been more units approved for construction than houses across the combined capital cities for 22 consecutive months.”

“Despite policy makers and analysts (including CoreLogic) voicing concerns about the level of housing construction currently underway, particularly for units, approvals in capital cities generally remain unquestionably strong,” adds CoreLogic.

“From here it will be interesting to see how many of these approvals immediately progress to commencement and ultimately through to a completion. Tighter lending conditions for both developers and purchasers for off-the-plan units is likely to result in a larger proportion of approvals that don’t proceed through to a finished product.”

 

Australia’s new home building to decline in coming years

24th August 2016

Australia’s new home building is set to decline in the coming years, following a boom that is “unlike any other that has come before”.

The latest Housing Industry Association report highlights the vital economic role that new housing activity continues to play in the Australian economy, but also recognises the unprecedented uncertainty facing the industry. HIA’s forecasts are for a peak of over 232,500 new dwelling commencements to have been reached in 2015/16, which will be followed by three consecutive years of decline.

“The current new home building boom is unlike any other that has come before it,” says Housing Industry Association Chief Economist, Dr Harley Dale. “It is the longest and largest in Australia’s history and has provided an unprecedented economic boost to the nation, without which domestic demand would be in or close to recession.

“This cycle is marked by substantial regional divergences in the levels of activity in various markets around the country; and the mix of dwelling types being built has changed dramatically. As the down cycle in new home building unfolds, the record pipeline of medium/high density dwellings in particular creates considerable uncertainty as to the timing and magnitude of the decline in construction.”

New dwelling commencements are forecast to bottom out at a level of around 166,500 in 2018/19, but there is downside risk to this forecast under current economic and political settings.

“Just as new home building activity seems to be reaching its peak, the recovery in the home renovations market has started to gather pace,” adds Dale. “National renovations investment got off to a great start in 2016, growing by 2.2 per cent in the March quarter. HIA expects that renovations activity grew by 4.2 per cent in 2015/16 – the fastest rate of increase in over a decade. Further growth over subsequent years is forecast to take renovations activity to a value of nearly $33.2 billion by 2018/19.”

 

Housing starts hit record high in Australia

20th July 2016

Housing starts hit a record high in Australia at the start of 2016, according to the latest figures.

Data from ABS for new dwelling commencements shows that the number of housing starts reached a fresh record in the 12 months to March 2016 (almost 230,000).

This rise “reinforces the vital economic role new home building continues to play in 2016”, says Housing Industry Association Chief Economist Dr Harley Dale.

“Residential construction is unequivocally the powerhouse of the Australian economy,” adds Dale. “In addition to being a key economic driver in its own right, new home construction is having a very strong positive impact on many other parts of Australia’s economy and labour market.”

“There are so many generalisations and exaggeration about purported oversupply in Australia’s housing market that the key point to recognise is lost – Australia’s economy and labour market would be substantially weaker without the new home construction sector.”

Detached housing starts have peaked for the cycle, while commencements of multi-units continue their “stratospheric rise”.

Over the 12 months to March 2016, new dwelling commencements increased in: the Australian Capital Territory (+44.1 per cent); New South Wales (+24.1 per cent); Queensland (13.1 per cent); Victoria (11.6 per cent) and Tasmania (+6.6 per cent). Commencements fell in the Northern Territory (-24.7 per cent), Western Australia (-19.0 per cent) and South Australia (-3.1 per cent).

Victoria leads housebuilding in Australia

Australia had a record year of housebuilding activity last year – and Victoria is leading the way. The Housing Industry Association’s latest bi-annual Housing Scorecard highlights just how varied performance was between the country’s regions over the last year.

“The eastern seaboard states have been the strongest performers, the mining states are sliding down the order, while South Australia and Tasmania are facing the most challenging conditions,” explains HIA Economist, Geordan Murray.

Victoria and New South Wales are the top two states, with “little to separate” them.

“With nearly 70,000 dwellings commenced in 2015 [out of total of 220,000], it is not all that surprising that Victoria was number one, but Victoria also ranked as the strongest market for renovations,” adds Murray.

“Western Australia is off the pace of the top two states, but still ranks third. The high ranking for WA belies the challenging conditions emerging for residential building, as evidenced by nearly eighteen months of falling home prices. The state’s overall ranking is propped up by strong performances in indicators of residential building that is already underway. The leading indicators highlight the recent deterioration in conditions and the prospect of weaker conditions ahead, which the HIA has been warning of for a considerable time.”

Queensland is not performing as strongly as Victoria and NSW, but the housing recovery is being tempered by the downturn in the mining and LNG sectors. The HIA also highlights a nascent recovery underway in Tasmania, albeit from a particularly low starting point.

2015 officially best year ever for Australian house building

21st April 2016

2015 was officially the best year on record for house building in Australia.

Final ABS results for 2015 confirm that just over 220,000 new dwellings began construction, 11 per cent up on the record year of 2014.

“It is impossible to overstate the importance of new home building in supporting economic activity over the past few years,” comments Housing Industry Association spokesperson Shane Garrett. “The mining slump left a big hole in economic growth, which residential building has partly alleviated, providing much needed employment in construction. Australia’s housing stock has been augmented significantly by the high levels of new home building. This will benefit our economic capacity and living standards for decades to come.”

New South Wales led the housing start surge, with dwelling commencements up 19.1 per cent, followed by Tasmania (18.8 per cent), Queensland (18.7 per cent), Victoria (17.3 per cent) and the ACT (6 per cent). Three regions saw housing starts fall: the Northern Territory (down 22.4 per cent), Western Australia (12 per cent) and South Australia (9.4 per cent).

New home building is likely to have peaked last year, though, notes Garrett, with fewer new homes expected to be constructed in the coming 12 months.

“Under current policy settings, new home building is then projected to fall below the levels required to provide for Australia’s long term housing needs,” he explains. “We must avoid this outcome by immediately tackling the heavy taxation burden on new home building, speeding up the planning process and doing more to deliver shovel-ready residential land. In the absence of serious housing policy reform, there is a real risk that we will fall behind in the race for better living standards.”

New builds in Australia set for a healthy year

4th January 2016

The new-build sector in Australia is set for a “healthy” 2016, the industry predicts.

2015 was “a stellar period for national new home building”, says the Housing Industry Association in its latest forecast for the market. Indeed, new dwelling commencements increased for a third consecutive year in 2014/15 to a record high of 211,860. It is only the fifth time in the past 60 years that housing starts have racked up three years of growth in a row. The nearly 212,000 starts mark a record-high level, 13 per cent above the previous cyclical high of 187,000 recorded in 1994.

The rate of growth in residential property prices, meanwhile, peaked in Sydney and Melbourne, even though “precious few households outside these two markets” enjoyed anything approaching boom conditions.

The HIA forecasts housing starts to exceed 200,000 in 2015/16, down 5.5 per cent from the previous year, although given that was a record peak, only a moderate decline.

“If we can progress right through 2016 with commencements holding up at an annualised level above 180,000,” says the group, “that outcome should be regarded as a healthy one.”

Nonetheless, 2016 represents “heightened uncertainty” for property market. Out of 13 factors that contribute to the HIA report, including figures from the ABS, HIA and other data, just three have positive outlook, with nine pointing downwards – the weakest the report has been in over four years.

However, the decline in these measures is generally modest, with none of them falling off a cliff.

According to the ABS, the different types of properties all have very different outlooks, with the HIA projecting further short-term growth for detached houses, semi-detached dwellings (of two storeys) and and units of one or two storeys.

Overall, New South Wales is the strongest housing market in Australia, followed by Victoria.

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