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Apartment approvals plunged by nearly 40% last month from November 2017 in seasonally adjusted terms – the weakest monthly result in more than five years, latest data from the Australian Bureau of Statistics shows.
By trend term, apartment approvals dropped 3.2% in December.
CommSec’s chief economist Craig James noted that apartment approvals are “notoriously volatile”, particularly during the low summer season.
“After an outsized jump in Melbourne high rise approvals in November, a ‘payback’ was expected. The decline in December more than wiped out the gains from the previous month. And it was the weakest monthly outcome since July 2012,” he said.
The fall in approved apartments dragged down the total number of dwelling approvals for the month, which went down by 20% in seasonally adjusted terms and by 1.7% in trend terms. This marks the third month total approvals have gone down.
"Dwelling approvals have weakened in December, driven by a large decline in private dwellings excluding houses. Approvals for private sector houses have remained stable, with just under 10,000 houses approved in December 2017,” said Daniel Rossi, director of construction statistics at the ABS.
The number of private houses approved inched up by 1.0% in December in seasonally adjusted terms. Over the year to December, the number was up by 5.5% -- the strongest growth rate in more than two years.
In trend terms, dwelling approvals went down the most in the Australian Capital Territory at 35.0% in December. The Northern Territory (12.9%), NSW (5.6%), South Australia (2.4%), Western Australia (1.3%) and Queensland (0.8%) all saw declines.
Tasmania (3.1%) and Victoria (2.5%) both recorded increases in approvals by trend terms.
Reacting to the decrease in housing approvals in NSW, industry organisation Urban Taskforce’s CEO Chris Johnson said a number of factors in Sydney’s housing market have combined and are discouraging developers from getting planning approvals.
“The banks are continuing to minimise lending for new housing, the investment from China has cooled, many councils are proposing significant levies for affordable housing, there is a growing negative community reaction to new housing and the state government is removing the cap on contribution levels by councils,” he said.
“When all of these factors combine confidence levels from developers decrease and the risk from new developments increases.”
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