New home approvals declined in 2019
According to data released by the Australian Bureau of Statistics (ABS) in May, the number of new dwelling approvals throughout Australia declined by 0.6% in March 2019. Based on dwelling approvals across Australia's states and territories, the numbers across Australia were mixed.
Dwelling approvals fell most significantly in March across the Australian Capital Territory and Northern Territory declining by 4.8% and 3.9% respectively. In Western Australia, Queensland and Victoria, increases in dwelling approvals occurred. Approvals increased by 3.8%, 3.5% and 1.4% respectively across Western Australia, Queensland and Victoria. New South Wales recorded a slight increase of 0.8% as did South Australia on 0.4%, while approvals remained flat in Tasmania.
The decreases in approvals are thought to have been driven by declines in approvals for private-sector houses. On a national scale, private-sector dwelling approvals for houses decreased by 1.4% in March. These declines came from New South Wales on 3.4%, Victoria at 1.8% and Queensland at 0.9%.
These recent falls in dwelling approvals aren't surprising given the recent slowdown in Australia's property market and tightening of lending criteria across all segments of the market.
Tim Hibbert, Principal Economist, Building and Construction for BIX Oxford Economics said the decreases in dwelling approvals are set to continue.
"The annualised rate of dwelling approvals has been above 200,000 for almost five years. The latest data pulls us below this watermark. The downward trend is set to continue over the remainder of 2019, with negative leads still coming through from property prices, turnover rates, housing finance, and land sales," said Mr Hibbert.
In contrast to the residential development sector, construction outside non-residential dwellings has been relatively strong in the year to date. According to the Australian Institute of Building, non-residential construction is expected to increase by 5.4% in 2018-19 and by 3.8% in 2019-20. For the broader economy, this will help to outweigh some of the negative data coming out of the residential property and construction markets in Australia.
It's also important to note that while a downturn in new dwelling approvals may seem alarming, it also plays a part in curbing the risk of oversupply — something that could add additional risk to the current market.
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