New home approvals in Australia remain at historically high levels but the latest data suggests they are slowing down, especially for houses.
The figures from the Australian Bureau of Statistics shows that approvals to build fell by 1.8% month on month in August but are still 10.1% higher than August 2015.
But more apartments are being approved than houses which highlights a growing shift towards densification with a particular emphasis on high rise unit developments. The number of houses approved for construction fell by 0.9% over the month to its lowest level since March 2014 and year on year they were down 5.8%.
The number of apartment units approved for construction was slightly lower over the month, down 2.5%, however, compared to the number in August 2015 they were 28.3% higher.
According to Cameron Kusher, head of research at property firm CoreLogic, despite the slight fall in approvals over the month they still remain at very high levels on an historic basis indicating that there remains a level of confidence from property developers that they can continue to bring new stock to the market and attract a sufficient level of demand to make a profit.
A breakdown of the figures show that 26.9% of all approvals were for townhouses, 5.1% were low-rise units of less than four storeys and 68% were for high rise units. The data also shows that over the four years to August 2016 there have been 112,153 townhouses approved for construction, 43,471 low-rise units and 232,232 high-rise units.
High rise unit approvals over that four year period have been more than double the number of townhouse approvals which historically been the dominant type of unit approval.
Regionally the number of approvals vary considerably. The highest growth was in Sydney with an increase of 45.8%, followed by Melbourne up 21.3% and Brisbane up 29%, but levels fell in Darwin by 28.4%, were down 38.3% in Perth, down 13.8% in Adelaide, down 6.6% in Canberra and down 4.4% in Hobart.
Approvals are expected to slow down in the next 12 months. ‘We’ve been expecting the number of dwelling approvals to start trending lower for some time and to date it just hasn’t occurred. We anticipate that approvals will slow over the coming year however, they are likely to remain high on an historic basis,’ said Kusher.
‘With tighter lending policies, particularly for investors it is reasonable to expect that once the slowdown occurs, it is likely to impact on the unit market more so than the detached housing market which tends to be dominated by owner occupiers more than investors,’ he added.