Analysis of data from the Australian Bureau of Statistics shows new house approvals in November declined to their lowest point since August 2013
The data revealed 15,465 houses were approved during November 2018, which Diwa Hopkins, economist for the Housing Industry Association, claimed was due in part to a decline of multi-unit homes.
“The monthly decline in total approvals was driven by multi-unit homes, which fell by 18.4 per cent, while detached house approvals declined by a more modest 2.3 per cent,” Ms Hopkins said.
The largest dwelling approval fall for November 2018 was noted in Victoria with a seasonally adjusted decline of 14.6 per cent, followed by NSW at 9.3 per cent, Western Australia at 7.3 per cent, South Australia at 4.6 per cent and Queensland at 4.3 per cent. Dwelling approvals also declined in the ACT by trend terms of 9.5 per cent, while holding steady in the Northern Territory.
Tasmania was the only state or territory to record a rise in approvals at a seasonally adjusted 30.6 per cent.
“This weak result shows just how much the current credit squeeze is weighing on the home building sector.
“The credit squeeze is happening at the behest of the banks’ own lending practices which have been tightened above and beyond APRA’s requirements.”
Ms Hopkins also said HIA research has found approval for new home construction has “blown out” from approximately two weeks to over two months, and while APRA’s decision to lift its interest-only cap has been welcomed, she said more needs to be done.
“Policy makers and lenders alike need to be cognisant that ordinary home buyers are now facing blowouts in loan processing times and also much greater rates of flat-out loan rejection. Today’s results show how this is weighing substantially on the new home building sector,” Ms Hopkins said.
“We’ve long been anticipating the current downturn in new home building, but there is a risk it could develop more quickly and strongly than expected.
“In particular, policy makers and lenders will need to respond judiciously to the pending release of the banking royal commission’s recommendations.”