Approvals for the construction of new homes have jumped 17.1 per cent in January, easily beating market forecasts of a five per cent increase.
After recording a 20 per cent decline in December, the figures were driven by a large increase in private dwellings excluding houses –apartments and townhouses – which were up 42.2 per cent.
Approvals for private sector houses fell 1.1 per cent.
“Apartment building has started the year with solid growth,” HIA senior economist Shane Garrett said.
Over the 12 months to January, building approvals were up 12 per cent with apartment approvals totalling 106,000 – particularly high by historic standards.
“The annual volume of apartment approvals has been north of the 100,000 mark continuously since early 2015,” Garrett said.
In NSW and Victoria, approvals recovered from the December decline with NSW marking a 29.7 per cent rise in permits while Victoria’s rose 21 per cent.
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Garrett said that new building approvals remained strong in Melbourne thanks to high levels of inward migration and a healthy labour market.
“Melbourne’s ability to accommodate an expanding population so well has been a big factor in its recent economic success,” he said.
Detached housing approvals across Australia remained largely unchanged over the three months to January, with the market likely to cool over the next year.
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“The heavy obstacles placed in the way of foreign buyers over the past year as well as the possibility of interest rate rises later this year are still likely to drag new home building activity lower over the medium term.”
--HIA economist Shane Garrett
The jump in approvals for apartments is good news for GDP growth in the near-term, as apartment prices continue to soften into 2018.
