Falls in Building Approvals to continue30 May 2019
The fall in residential dwelling approvals continues and whilst the rate of decline is slowing the impacts will linger well into 2020. Approvals for detached housing is down -7.5% over the past 12 month period, compared to the previous 12 months, with the April figure down -23% on April of last year. For Apartments, the change has been just as significant with April down -24.4% and with an annual decline also down -24.5% against the previous 12 months. The outcome of the Federal Election has provided some confidence to the market, however, the prospects of lower interest rates is unlikely to provide developers with sufficient confidence to pursue fresh development applications until credit conditions demonstrate increased lending. Anecdotal evidence suggests that banks are still grappling with the need to fully assess a borrowers ability to pay despite a change to the serviceability tests required by APRA. As is shown in the chart below, Melbourne continues to experience the most significant decline in apartment building approvals with April results down -48% on April of last year and the total for the 12 months down -34% on the previous 12 months, suggesting that the rate of decline is worsening. Sydney apartment approvals are still declining, down -18% on the same month last year and down -22% for full the 12 month period. Brisbane apartment approvals began falling sooner than Sydney and Melbourne and are now down just -5% on April of last year and are down -28% on the full 12 month period. The detached dwelling approvals are now starting to show signs of significant slowing. In Sydney detached housing approvals are down -34% for the month whilst the full 12 month period is down just -8%, in other words the recent declines are more significant which suggest that the annual results will continue to decline significantly. In Melbourne the detached approvals are down -28% and for the 12 months are down -8.4, and Brisbane is down -26% for the month and 11.8% for the full 12 month period.