New home building stumbles into 2016

Building approvals for detached houses and multi-units weakened in January, according to new figures released by the Australian Bureau of Statistics (ABS).

Overall, a total of 17,446 new dwellings were approved in the first month of 2016, down 7.5 per cent from December 2015.

Multi-unit approvals experienced the biggest reduction, down 9.1 per cent, while detached house approvals decreased by 6.1 per cent.

However, in the 12 months to January, a total of 231,752 residential dwellings were approved, a 10.6 per cent rise on the previous 12-month period.

South Australia recorded the largest increase in approvals at 14.2 per cent, followed by Western Australia (7.2 per cent) and Victoria (2.9 per cent).

New South Wales saw the largest fall in approvals at 22.9 per cent, followed by Queensland (13.4 per cent) and Tasmania (11.1 per cent).

HIA senior economist Shane Garrett noted that the residential construction industry was hit by several unfavourable developments towards the end of 2015.

“The major banks increased their mortgage interest rates, credit conditions were tightened for domestic investors and the $5,000 foreign investor fee came into force. This has made it more difficult to deliver new housing supply, and [these] figures seem to bear this out,” he said.

Mr Garrett said the HIA’s recent Housing Australia’s Future report warned of the major challenges in meeting the nation’s housing needs in the coming decades.

“It is therefore vital that policy settings and credit conditions become more focused on the consistent delivery of the required volume of new housing supply over the long term. We’re just not seeing this at the moment,” he said.

[Related: Economist calls for focus on future housing supply]

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