Approvals for the construction of new residential dwellings have taken a significant tumble in August, as the apartment construction boom subsides.
According to the Building Approvals data from the Australian Bureau of Statistics, 18,701 dwellings were approved for construction over the month of August – down 6.9% on the month prior.
Mortgage Choice chief executive officer John Flavell said the 6.9% drop could largely be attributed to a significant drop in the number of apartments that were approved for construction.
“Throughout the month of August, 8,760 private sector dwellings excluding houses were approved – down 11.4% on the month prior,” he said.
“While this is a significant drop, it is not surprising when you consider that the apartment sector is incredibly volatile month to month due to the approval of large developments.
“If you look at the July data, 9,087 private sector dwellings excluding houses were approved – which was up 6.1% on the month prior. This data would suggest several significant apartment developments were approved in July, and the drop August dwellings approvals is just payback for that.”
However, Flavell says the drop in building approvals is nothing to worry about.
“While the overall drop in building approvals was bigger than economists’ predicted 2% fall, there is nothing to suggest the overall level of dwelling construction is sliding into ‘worrying territory’,” he said.
“Not only have a lot of huge proposed apartment complexes been approved recently, but if the housing finance data from the Australian Bureau of Statistics is anything to go by, then demand for home loans and, in turn, property is still incredibly strong.
More than 53,000 home loans were approved over the month of July, up 0.3% on the month prior, according to the Australian Bureau of Statistics.
