The number of home approvals in Australia fell by 1.9% in May 2017, having fallen for three months in a row to 18% below the peak of May 2016, the latest official data shows.
Approvals fell by 8.2% in the Australian Capital Territory, by 3.9% in Victoria, by 3.7% in Western Australia and by 2.6% in New South Wales, according to the figures from the Australian Bureau of Statistics (ABS).
But home approvals increased by 2.2% in Queensland, by 2.1% in the Northern Territory, by 1.6% in South Australia and by 1.5% in Tasmania.
In trend terms, approvals for private sector houses were flat in May with some regional variation, for example up by 1% in South Australia, by 0.4% in New South Wales and by 0.2% in Victoria but fell in Queensland by 0.9% and in Western Australia by 0.6%.
According to the Housing Industry Association (HIA) it is now clear that there is a slowdown and it also pointed out that a steady decline in building activity, the industry body predicted, has taken hold.
‘Building activity has declined to levels last experienced in the middle of 2014, before the record peak in March 2016. At the core of this drop in activity is primarily the slowdown in construction of new apartments and units, particularly on the east coast,’ said HIA’s principal economist Tim Reardon.
He pointed out that a record number of apartments are due to come onto the market this year and the next phase of investment is now not likely to occur until the apartments currently under construction clear the market.
But he also said that the downward trend is not cause for alarm. ‘We are coming down off the back of records levels of activity in recent years, particularly in apartments. The housing industry is well placed to balance cyclical changes in demand and HIA’s forecasts expect that we will return to a growth market before the end of the decade,’ he explained.
In terms of activity only Western Australia and Tasmania saw an increase, up 4.1% and 12.3% respectively while a sharp drop in apartment construction in Sydney dragged down overall activity in New South Wales by 17%.
South Australia saw building activity fall by 11.1%, while there as a fall of 10.2% in Queensland and a drop of 1.9% in Victoria. But in the ACT and the Northern Territory there was a much sharper fall of 65.8% and 43.4%.