The sharp fall in building approvals across Victoria at the end of last year is already showing signs of slowing the construction sector, according to a property expert.
The latest figures from the Australian Bureau of Statistics show that dwelling approvals in Victoria fell by 12.3 per cent, amid an overall 4.4 per cent slump across the nation.
Angie Zigomanis, BIS Shrapnel’s senior property analyst, told Smart Property Investment that the slowdown of approvals is beginning to take its toll on construction.
“Building approvals for detached housing has slowed significantly,” Mr Zigomanis said. “That’s reflected in lower levels of construction for new housing in the outer suburbs."
“The apartment sector has stayed higher for a little longer, but there’s evidence that’s starting to come off in the last six months or last year as well.”
Mr Zigomanis explained Victoria is coming off a “cyclical peak” in residential construction after a record level of approvals in the past year.
“From a construction perspective, those approvals mean there will still be high levels of construction taking place in the apartment sector in the next year or two,” Mr Zigomanis said. “But that will start to tail off."
Commenting on whether the supply will be absorbed, Mr Zigomanis said it will depend on a number of factors.
“It will depend partly on location and partly on other factors such as Victoria’s level of population growth, which is starting to see some recovery in overseas migration," Mr Zigomanis said. "The question is whether that growth will be strong enough to meet that supply.”