Building Approvals Nose Dive4 March 2019
Residential apartment approvals continue to nose dive as the economy unwinds the debt fueled apartment residential boom. The traditional detached housing markets however continue to show relatively consistent results with only minor declines being experienced in Melbourne. The combined data for the Capital Cities Apartment Approvals reveals that apartment approvals for the 12 months to January 2019 are down 16,928 to 74,088, or -18% on the prior corresponding 12 month period to January 2018. The decline in approvals for January was led by the Melbourne apartment where there was a 64% drop in approvals for January 2019 vs 2018. Brisbane also dropped 63% (off a lower base) and Sydney dropped 39%. Perth recorded a slightly recovery in apartment approvals, up 17% for January 2019 vs 2018. Such significant movements in apartment approvals reflect the limited appetite developers across the country have to secure approvals given the increased risks they have in maintaining end values, securing funding and meeting pre-sale conditions. Whilst in the short term, the reduced supply will allow excess stock to be absorbed quickly and reduce construction pricing the economic multiplier from the sector will state to impact consumer consumption and overall economic activity.