The number of new apartments approved for construction has dropped by more than 20% in May, official figures have revealed.
According to building approvals data released by the Australian Bureau of Statistics (ABS), the total number of new residential flats, units or apartments approved fell to 6,031 in May – a decrease of 24% from April.
“Multi-unit approvals tend to bounce around a lot from one month to the next, but it’s been clear for some time that activity on this side of the market has peaked,” Housing Industry Association (HIA) senior economist, Shane Garrett said.
The total number of residential dwelling units approved – which includes detached houses, semi-detached houses and apartments – decreased by 2% over the month. The result as buoyed by a 12% rise in the number of new houses approved for construction.
“Interestingly, the RBA
cut interest rates during May and today’s result indicate that this move may have helped contribute to steadier conditions for detached house approvals,” Garrett said.
However, the housing association believes that new home building has passed its peak.
“Today’s figures fit closely with our view that new home building activity is in the process of declining from last year’s record peak to more modest levels as the end of the decade approaches,” Garrett said.
“The contraction in activity is predicted to be concentrated on the multi-unit side, with a more measured reduction in detached house building.”
The contraction in the construction of multi-unit dwellings may come as a relief following concerns over an apartment oversupply emerging on Australia’s east coast, particular in Melbourne, Sydney and Brisbane.
New apartments approved for building declined by 62% in Queensland over May and declined by 24% in New South Wales. New apartment approvals increased modestly, by 3%, in Victoria.