New home approvals reach six month high in Australia, but expected to fall back
Approvals for new homes in Australia have reached a six month high, led by a rise in permissions for apartments then detached houses, the latest research shows.
Figures from the Australian Bureau of Statistics (ABS) show that approvals increased by 8.3% during February 2017 with a 5.7% rise for detached homes and an 11% increase for apartments.
Over the past 12 months, new property approvals have totalled 229,091 across Australia and Shame Garrett, senior economist with the Housing Industry Association (HIA) said that this will ensure that a substantial pipeline of work will keep the housing industry busy for much of 2017.
But he explained that despite the sharp rise during February, the overall building approvals profile is consistent with the HIA’s expectation that new home construction will revert to lower levels over the next few years.
‘The multi-unit side of the market will see the greater share of the reduction in new home building activity. Already approvals are down by over 20% in quarterly terms since August of last year,’ Garrett said.
A breakdown of the figures show that the rise is not universal and dependant on locations as new home building approvals were up only in two states with Queensland recording a rise of 33.7% and New South Wales up 19.6%.
The largest reduction was in Tasmania with a fall of 14.7$, followed by Victoria down 8.8%, Western Australia down 5.5% and South Australia down 2.5%. While in trend terms, approvals fell by 13% in the Northern Territory and by 15.7% in the Australian Capital Territory.
Meanwhile, a new report suggests that affordability is becoming more of an issue in Australia with rising immigration in Sydney and Melbourne leading to more demand for homes. The State of the Land report from the Urban Development Institute of Australia (UDIA) say that the price for building land in these two cities increased by 10% in 2016.
Accordingly, the price of land per square metre surged by 13% to $602 in 2016. This means that a 508 square meter plot in Sydney lot would have cost $585,000 in 2016 compared with $295,000 four years earlier.
The report suggests that the rising price of building plots is due to a surge in demand for suburban homes as immigrants from countries like India, the Middle East and Sri Lanka was detached houses rather than apartments in inner city areas.