“With home prices falling, access to finance more difficult and fewer people now entering the country, the number of new homes approved for construction has declined,” said Diwa Hopkins, HIA Economist.
ABS data released show that 16,447 homes (seasonally adjusted) were approved for construction in August 2018 – a level that is 9.4 per cent lower than in July 2018 and 13.6 per cent lower than in August 2017. The latest level of approvals is the lowest since October 2016.
“The new home building sector has been cooling modestly over the past year after reaching all-time high levels of activity during 2015 through to 2017,” added Ms Hopkins.
“Just as apartment construction drove the increase in home building to record levels, approvals data is signalling that apartments will lead the decline.
“Approvals for units fell by 17.2 per cent in August 2018, to be 23.7 per cent lower than a year earlier. “The key risks that we’re watching relate to credit conditions and population growth.
“Constraints on the availability of finance through APRA and increased prudential constraints by banks are restricting investment in new homes.
“Population growth has slowed since the government introduced stricter visa requirements in 2017. As global economic conditions improve, skilled migrants who might otherwise consider immigrating to Australia could be more inclined to look to other similar advanced economies where entry requirements are less restrictive.
“The outlook for detached house building is better than for units, with the latest approvals data indicating declines likely to be much more modest,” added Ms Hopkins.
“Detached house approvals declined by 1.7 per cent in August 2018 and are a modest 4.2 per cent lower than a year previously,” concluded Ms Hopkins.
Total seasonally adjusted dwelling approvals in August 2018 fell across the eastern seaboard states: Victoria (-12.0 per cent); Queensland (-8.4 per cent), and; New South Wales (-2.7 per cent). Tasmania experienced the largest monthly fall (-18.6 per cent). Elsewhere approvals increased: Western Australia (+14.7 per cent) and South Australia (+9.6 per cent). In trend terms, total dwelling approvals in August 2018 increased by 1.5 per cent in the Northern Territory and was virtually unchanged (up by 0.1 per cent) in the Australian Capital Territory.