New figures from the Australian Bureau of Statistics show that building approvals hit a three-month high in October.
According to the latest building approvals data from the ABS, 19,652 dwellings were approved for construction over October – up 3.9 per cent on the month prior.
Mortgage Choice chief executive officer John Flavell said the spike in dwelling construction could be largely attributed to the "sudden surge in the number of apartments that were approved for erection".
“Throughout the month of October, an incredible 10,091 private sector dwellings excluding houses were approved – up 10.6 per cent on the month prior,” Mr Flavell said. “The last time more than 10,000 apartments and 19,000 units were approved for construction was back in July 2015,” he said.
“This ongoing strength in the construction sector shows how robust and demanding the property market is at the moment.”
Moving forward, Mr Flavell said it was important that the type of dwellings being approved for construction were the “right” type.
“In Australia, we are wedded to the idea of having a three-bedroom, free-standing home with a backyard,” he said.
“While apartment construction is helping to meet some of the demand, the reality is, the demand for houses is not going to disappear overnight. As a country, we need to make sure we are building the right type of dwellings that can cater to the property demand.”
The ABS data for October released yesterday shows that 9,349 private sector houses were approved for construction – down 2.1 per cent on the month prior.
“The last time 9,300 private houses were approved for construction was back in September 2014 – over 12 months ago,” Mr Flavell said.
“Data from CoreLogic RP Data shows houses have a higher capital growth rate than apartments because this type of dwelling is more desirable.”
Mr Flavell added that it is important to take this information into consideration when making construction decisions.
“We need to make sure we don’t end up with a glut of apartments that can’t be sold.”
[Related: Surge in apartment construction continues]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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