The number of dwellings under construction is likely “weighing on enthusiasm” for new approvals, says ANZ.
Building approvals declined in December and remain below recent peaks, according to ANZ’s latest Quick Reaction analysis.
Movements in the apartments segment of the market saw total approvals in New South Wales fall by 13 per cent month-on-month to the lowest level in two years, while approvals in Victoria rose by 17 per cent month-on-month.
“Overall, we are seeing mounting evidence that approvals are starting to consolidate around lower levels,” ANZ said.
The bank pointed out that 51,000 dwellings have been approved over the past three months, which is down on the 60,000 per quarter that was sustained through the middle of 2016.
“The majority of this slowdown is coming from the high density, high-rise apartment segment,” the bank said.
ANZ said it is likely that the volume of supply set to stream in over the next 12-18 months is weighing on new approvals.
“This view is supported by the slowdown in investor borrowing approvals for housing construction, despite overall investor finance accelerating recently,” it said.
“Total building approvals have now been trending lower since mid-2015, although the significant backlog of work means that construction activity will remain elevated through 2017.”
ANZ concluded that it remains comfortable with its view that dwelling construction will “remain elevated but gradually ease” throughout the year.