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Analysis of ABS data by the Housing Industry Association (HIA) shows building approvals are continuing to slow, and not even the strongest state for approvals can keep them up.
During the month of July, building approvals declined by 5.2 per cent, 5.6 per cent lower than this time last year according to Tim Reardon, principal economist at the HIA.
South Australia was the largest recipient of building approval declines when looking at total seasonally adjusted dwelling approvals, falling 26.5 per cent over the last month. This was followed by 14.7 per cent in Western Australia, 5.2 per cent in Victoria and 4.6 per cent in NSW.
Meanwhile, the largest rise in building approvals was recorded in Tasmania, followed then in trend terms by the Australian Capital Territory at 12.2 per cent and then the Northern Territory at 4.5 per cent.
“Weaker conditions in a number of states have typically been overshadowed by strong activity in Victoria. With Victorian home approvals now showing signs of weakness we expect the national trend – of declining building approvals – will continue throughout 2018,” Mr Reardon said.
Since peaking in late 2017, Mr Reardon said property has generally been cooling.
“The market is cooling for a number of reasons including a slowdown in inward migration since July 2017, constraints on investor finance imposed by state and federal governments and falling house prices,” he said.
“Finance has become increasingly difficult to access for home purchasers. Restrictions on lending to investors and rising borrowing costs have seen credit growth squeezed. Falling house prices in metropolitan areas have also contributed to banks tightening their lending conditions which have further constrained the availability of finance.”
If interest rates charged by banks were to increase, Mr Reardon predicts the building slowdown will accelerate.
“In addition, a slowing in Australia’s population growth since June 2017 coincides with changes to visa requirements announced early last year. Since then Australia has experienced almost a year of slowing population growth,” he said.
“Irrespective of all of these negative influences, the volume of approvals for new detached houses have been tracking around their strongest levels in 15 years.”