After an unexpected rise in February, the number of new dwellings approved in March fell by a seasonally adjusted 15.5%.
These figures come courtesy of the Australian Bureau of Statistics’ Building Approvals data for March 2019, showing how many new buildings are approved for construction month-to-month.
The February data showed a 19.1% seasonally adjusted increase from January, driven largely by a 64.6% increase in apartment and townhouse approvals.
In March, apartments and townhouse approvals fell by 30.6%, offsetting a 3.2% decrease in private sector housing approvals.
On an annual basis, approvals are down 27.3% (seasonally adjusted).
Tim Hibbert, building and construction economist for BIS Oxford Economics, said this trend is likely to continue into 2019.
“Negative leads (are) still coming through from property prices, turnover rates, housing finance and land sales,” Mr Hibbert said.
The total number of dwellings approved now sits at 14,429 – 8,635 for private houses.
According to Housing Industry Association economist Geordan Murray, this is a five-year low for houses, with approvals not reaching this level since June 2013.
“House approvals slowed considerably over the first three months of 2019. Approvals fell by 4.8 per cent during the March 2019 quarter which follows from steady declines during 2018,” Mr Murray said.
“Today’s data shows how the tightening in the lending environment during the second half of 2018 is echoing through the home building market.”
Mr Murray also said the number of households forced out of the market by the credit squeeze has left a “sizeable hole” in demand for new homes, with builders reporting a drop off in enquiries.
“We expect approvals numbers to continue softening throughout 2019 as the ongoing impact of the credit squeeze combined with pre-election uncertainty impact demand for new homes,” he said.
“State and federal governments should be looking at ways to sure up confidence in the housing market, for both owner-occupiers and investors.
“This is not the time for new constraints or tax imposts on new housing that could exacerbate the downturn.”
Seasonally adjusted figures – national approvals
|March 2019||February 2019 – March 2019 change||March 2018 – March 2019 change|
|Total dwelling units approved||14,429||-15.5%||-27.3%|
|Private sector houses approved||8,635||-3.2%||-18.3%|
|Private sector dwellings excluding houses (apartments, townhouses etc.)||5,588||-30.6%||-38.8%|
Sliding building approvals represents a significant risk for the economy as it is the second biggest employer in the country behind healthcare and retail.
NAB economist Kieran Davies said the RBA is likely to downgrade its outlook for housing construction in its statement on monetary policy next week.
“Further weakness seems likely given approvals of houses are still falling and tight credit conditions for high-rise apartments, although lower interest rates may temper the decline,” he said.