ABS approvals data released on Thursday showed a rise in approvals for construction of new homes of 0.9 per cent, defying analysts' expectations of a 1.0 per cent decline.
Despite apartment approvals remaining volatile on a month-to-month basis, this was the third consecutive month of new home building expansion as a result of significant growth in Victoria.
Dwelling approvals increased by 0.9 per cent in October compared to September, driven by a rise in private house approvals (1.5 per cent), while private dwellings excluding houses -- apartments and townhouses -- fell 1.0 per cent.
“This growth was underpinned by a 24.3 per cent increase in approvals in Victoria and 6.1 per cent growth in Queensland, which outstripped the declines in all other states,” Housing Industry Association senior economist Shane Garrett said.
“The remarkable growth in Victoria is the stand-out feature of the Australian housing market at the moment.
“Strong employment growth in Victoria is attracting interstate and international migration and the rising population is continuing to drive demand for more housing stock. The record supply of new apartments in the state has not been able to fully satisfy demand.”
[Related reading: Building Approvals Rise Again In September]
The declines were recorded in Western Australia (-17.8 per cent), Tasmania (-13.1 per cent), South Australia (-8.4 per cent), New South Wales (-6.8 per cent) and the ACT (-5.3 per cent).
Nationally, approvals for private houses were a significant 18.4 per cent higher than in October last year, with apartments up 37.6 per cent.
“During 2018, we foresee an 8.2 per cent reduction in new dwelling starts followed by a decline of 10.0 per cent in 2019. This will mean that new home building activity will ease to levels that remain high by historic standards,” Garrett said.
Housing construction activity is continuing to be underpinned by record low interest rates and strong population growth. Rising household debt has been a major concern for regulators, which prompted the Australian Prudential Regulation Authority to tighten investor lending rules in March.
