One reason why the Reserve Bank is feeling a bit more confident about the economy (but more than a bit concerned about what lies ahead for the apartment sector of the property industry) is the continuing strength of the dwelling building industry.
But that strength is confined to the east coast, while approvals, especially for new houses, remains very weak in South and Western Australia and in the Northern Territory.
Figures also out yesterday showed home construction hit a 16-year high in Sydney, and the building approvals data from the Bureau of Statistics showed a better than forecast performance in August.
In fact building approvals grew in August at their quickest pace in 10-months.
While approvals eased 1.8% from July’s 12% (revised from 11.3% increase originally reported) rise. Economists expected a sharper contraction of 6%, with some forecasts looking for a drop of up to 9% in the month.
July’s 12% rise was the biggest leap since September 2013 and was driven by non-private dwellings (apartments, units, townhouses).
The annual growth rate hit 10.1% for the 12-months to August, up from the revised 4.2% in July (3.1% originally).
Approvals for private sector houses fell a seasonally adjusted 1.3% in the month, and the ‘other dwellings’ category, which includes apartment blocks and townhouses, was down 3.6%. In trend terms total approvals rose 0.6% in August, and has now risen for the past 9-months, according to the ABS.
“The strong results in July and August was primarily driven by the ‘other dwelling’ segment which is mainly comprised of apartments. It was the first time on record where we’ve seen the number of dwellings approved in this segment exceed 11,000 for two consecutive months,” according to HIA Economist, Geordan Murray.
"The number of detached house approvals remained relatively consistent with recent months, however we’ve now seen three consecutive monthly declines in approval numbers in this segment.”
“The divergent levels of activity levels in each state and territory continue to highlight that the current cycle is very much an eastern seaboard story. This is particularly evident when you look at the change in the levels of activity compared with August last year. New South Wales, Victoria, Queensland and the ACT are all up on the year ago levels, whereas South Australia, Western Australia, Tasmania, and the NT are all down by more than 20 per cent,” concluded Mr Murray.
Meanwhile, just over 30,000 homes were built in Sydney in the last financial year, the most building activity since 2000.
Figures from the Metropolitan Housing Monitor released yesterday revealed that 2015-16, saw 30,191 new houses and apartments were completed, up 10% year-on-year,This compared to the previous record of 30,520 new homes built in 1999-2000, when builders were rushing into the market before the introduction of GST in July 2000.
