Fewer apartment approvals, but Sydney crane trends signal construction strength

Fewer apartment approvals, but Sydney crane trends signal construction strength
Fewer apartment approvals, but Sydney crane trends signal construction strength

The continuation of construction jobs in the property industry looms as the big issue that will likely shape the 2020 property market trajectory.

Sydney apartment approvals have taken a dive and new house approvals are also in decline.

Only 830 attached dwellings were approved across Sydney in October, dramatically down on past Octobers.

The same month last year saw 2400 approvals, with 3700 in October 2017; 3100 in October 2016 and 4000 in October 2015. 

Sydney is not alone in declining approval figures with the trend apparent in Melbourne and Brisbane. 

The trend threatens employment continuity. Having a job ensures mortgage arrears remains low amid highly indebted households.

These building sites jobs are crucial to assist in the overall health of the wider economy.

The number of cranes on our skyline always provide an insight into the cyclical urban economic trends.

Interestingly the crane numbers in Sydney have yet to show any decline in 2019, in fact they have increased by nine to 319, according to the most recent quarterly edition of the RLB crane index.

The 2017 peak saw 350 Sydney cranes in the index, which began in 2012.

Residential cranes dominate with 73% of all cranes assisting in the construction of future dwellings.

The residential sector remained strong with 233 cranes, up one from six months ago. 

Strong growth within the commercial office sector saw an additional net six cranes.

Sydney saw 189 cranes added to sites indicating a strong forward workflow while some 180 cranes were removed from completed developments in the past six months.

Cranes across Sydney are following the significant spend on transport infrastructures, especially north along the Pacific Highway, west along Parramatta Road, northeast along the M2 and south along the Kingsway.

Crane activity has declined in the north, but risen in the south, the east and inner Sydney. 

The most significant addition was seven cranes at MeritonS Pagewood Green. Crane removals saw four taken down at the Greenland’s development in North Ryde along with Ganellan’s nearby Delhi Road project.

Currently Sydney has 42% of all cranes erected nationally, while Melbourne contributes 28%, and Brisbane 7.5%.

Sydney’s dominance has fallen from the high of 52% in 2017.

In the first quarter of 2019 there were 735 cranes counted across Australia, with 530 for residential projects and 205 non-residential developments, including offices, transportation, hotels, education, health and retail.

There were no cities within the index that recorded crane falls in the double digits, a sign that the industry has not yet entered into the economic cycle of falling demand as predicted by some.

But continuity within the typical boom-bust building-buying cycle has never been easy.

And the emerging pipeline certainly doesn't look pretty. The national monthly building approvals have trended lower from about 20,000 to 13,000, which property commentator Pete Wargent suggested "looks very much like a recessionary trend".

Rolling annual approvals are now down from the 2016 peak of 242,000 to 173,000.

Of course securing rezoning and approvals take time. 

“It takes twice as long to have a DA processed in NSW as it does in Victoria and three times as long as in Queensland," Urban Taskforce CEO Tom Forrest said recently.

It is to be hoped the residential price growth experienced in recent months will reignite developer activity in buying sites for apartment construction.

All those tradies in their high visibility vests are counting on it. 

This article first appeared in The Daily Telegraph. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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Sydney Cranes

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