New home building forecast to slow down under

Photo credit: 8LettersUK

New home building in Australia is forecast to slow down in 2016, as new figures reveal that approvals declined this summer.

The latest ABS figures show that approvals for detached house building remained strong in August, but that falling approvals for multi-unit building weighed on the overall result.

Indeed, the total number of new homes approved for building declined by 6.9 per cent, despite growth of 4.4 per cent in detached house approvals. It was a 16.9 per cent fall in multi-unit approvals that considerably outweighed the uplift on the detached house side.

Compared with 12 months ago, activity is still higher on both sides of the market, however. Detached house approvals increased by 3 per cent year-on-year, while multi-unit approvals have seen growth of 8.6 per cent.

"Australia’s new home building market saw record levels of activity during 2014/15, with new dwelling commencements totalling about 215,000," notes HIA Senior Economist, Shane Garrett. "We project that new home building will ease back during the 2015/16 year, so the slowdown in building approvals is unsurprising in this context."

Indeed, the residential construction sector as a whole is facing strong headwinds in the form of tight land supply conditions in key markets, planning delays, and the unfavourable effects of recent credit restrictions, notes the HIA.