Fresh figures have revealed that building approvals fell significantly in August following a rebound in July.
According to the Australian Bureau of Statistics, 18,701 dwellings were approved for construction over the month of August – down 6.9 per cent on the month prior.
Mortgage Choice chief executive officer John Flavell said the 6.9 per cent drop could largely be attributed to a significant drop in the number of apartments that were approved for construction.
“Throughout the month of August, 8,760 private sector dwellings excluding houses were approved – down 11.4 per cent on the month prior,” Mr Flavell said.
“While this is a significant drop, it is not surprising when you consider that the apartment sector is incredibly volatile month-to-month due to the approval of large developments.
“If you look at the July data, 9,087 private sector dwellings excluding houses were approved – which was up 6.1 per cent on the month prior. This data would suggest several significant apartment developments were approved in July, and the drop August dwellings approvals is just payback for that.”
Mr Flavell said many proposed apartment complexes have been approved in recent months, especially in the outer suburbs of Sydney, where supply is struggling to keep up with demand.
“While the overall drop in building approvals was bigger than [the] predicted two per cent fall [by economists], there is nothing to suggest the overall level of dwelling construction is sliding into ‘worrying territory’,” he said.
“Not only have a lot of huge proposed apartment complexes been approved recently, but if the housing finance data from the Australian Bureau of Statistics is anything to go by, then demand for home loans and, in turn, property is still incredibly strong.”
The latest housing finance data shows more than 53,000 home loans were approved over the month of July – up 0.3 per cent on the month prior.
[Related: Building approvals bounce back in July]