Building approvals stumble into 2016: HIA's Shane Garrett
GUEST OBSERVER
ABS figures show that new home building approvals faltered during the first month of 2016.
January 2016 was a rather weak month for new home building approvals, with both detached house approvals and those for multi-units falling back compared with December.
During January 2016, new home building approvals declined by 7.5 percent. This comprised a 6.1 percent drop in detached house approvals and a reduction of some 9.1 percent in multi-unit approvals. Over the past year, approvals totalled some 231,752 which is 10.6 percent higher than the previous 12 month period and still very strong by historical standards.
Towards the end of 2015, the residential building industry was hit by a number of unfavourable developments. The major banks increased their mortgage interest rates, credit conditions were tightened for domestic investors and the $5,000 foreign investor fee came into force. This has made it more difficult to deliver new housing supply and today’s figures seem to bear this out.
The HIA’s Housing Australia’s Future report warned last week of the major challenges in meeting Australia’s housing needs over the coming decades. It is therefore vital that policy settings and credit conditions become more focused on the consistent delivery of the required volume of new housing supply over the long term. We’re just not seeing this at the moment.
During January 2016, total seasonally adjusted new home building approvals saw the largest increase in South Australia (+14.2 percent), followed by Western Australia (+7.2 percent) and Victoria (+2.9 percent). The volume of approvals fell in New South Wales (-22.9 percent), Queensland (-13.4 percent) and Tasmania (-11.1 percent). In trend terms, approvals saw a 9.4 percent decline in the Northern Territory and contracted by 11.4 percent in the Australian Capital Territory.
Shane Garrett is senior economist for HIA and can be contacted here.