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Apartments Buck Slowing Approvals Trend in September

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Building approvals increased by 3.3 per cent in the month of September led by a rise in the apartment sector, the latest ABS data reveals.

Seasonally adjusted, private sector housing decreased 2.7 per cent in September, taking the quarterly decline to five per cent.

While dwellings “excluding houses”, which covers apartments and townhouses, climbed 9.2 per cent in the month, following the 21.9 per cent tumble from the same month a year earlier.

Despite the apartment boost, the stats remain 11.1 per cent lower than the same quarter last year as constraints on finance continues to take its toll.

The data comes after a recent Corelogic report revealed the hike in mortgage rates from Australian banks will further weaken house prices.

The housing market has been cooling modestly since a peak in late 2017 with the bulk of the decline consistently occurring in the apartment market sector, explained HIA’s economist Tim Reardon.

“The trend of a cooling housing market, which has been evident throughout 2018, continued in the three months to September with approvals now 6.6 per cent lower than the preceding quarter,” Reardon said.

“The market is cooling for a number of reasons most notably due to constraints on the availability of finance.

“Restrictions on lending to investors and rising borrowing costs have seen credit growth squeezed.

Reardon also attributes a slowdown in Australia’s population growth since June 2017 which coincides with changes to visa requirements announced last year.

Total seasonally adjusted dwelling approvals in the September quarter increased in Tasmania by 8.5 per cent, while dropping elsewhere across the country.

Seasonally adjusted approvals decreased in South Australia (-21.2 per cent), Western Australia (-8.7 per cent), Victoria (-8.4 per cent), New South Wales (-7.5 per cent) and Queensland (-4.2 per cent). While increasing by 8.5 per cent in Tasmania.

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Article originally posted at: https://theurbandeveloper.com/articles/finance-constraints-and-cooling-market-drag-building-approvals