New data on housing approvals has revealed the changing nature of Australia’s real estate market.
The number of dwelling approvals reached a record 19,282 in January, according to the Australian Bureau of Statistics.
That marked a 9.1 per cent increase on the previous year and a 5.7 per cent increase on the previous record result of 18,245, which occurred in November 2014.
Approvals for private sector houses fell 2.9 per cent to 9,449 – but this was more than offset by private sector multi-unit approvals, which jumped 23.6 per cent to 9,566.
January 2015 was only the second time that approvals for units have exceeded houses. However, Housing Industry Association economist Geordan Murray said this was not due to the poor performance of the detached house market.
“Changing consumer preferences, demography, affordability challenges and aspects of the policy environment are all contributing to the current situation where a larger share of new homes are in the form of [an] attached dwelling,” he said.
Mr Murray said a sharp spike in unit approvals in Queensland had combined with solid levels of unit approvals in NSW and Victoria to lift the national total.
“These three states typically account for around 80 per cent of all multi-unit residential building and when you have all three performing strongly, it’s a recipe for a strong national result in this segment of the market,” he said.
Nicholas Pound, residential executive director at the Property Council of Australia, said most states are seeing an improved pipeline of potential activity.
However, Mr Pound warned that there is an emerging issue around building approvals not converting to actual starts due to costs, delays and obstructive policy settings.
“That’s why reform is so vital, to ensure that the high approval numbers are translating into construction of the new homes needed to meet demand and keep a lid on process,” he said.
“And it’s yet another reason why we can’t afford to be discouraging foreign investment, which is so critical to turning approvals into actual builds.”