Australia’s residential construction industry has had a subdued start to the year, with figures showing a solid decline in housing approvals over the month of January.
The Australian Bureau of Statistics (ABS) figures show that housing approvals experienced a month-on-month fall of 7.5% over January, driven by a 9.1% decline in approvals for multi-unit dwellings.
Detached housing approvals fell 6.1% over the month.
In the 12 months to January, housing approvals in Australia totalled 231,752, a 10.6% increase on the previous 12-month period.
Housing Industry Association senior economist Shane Garrett said the figures highlight the impact recent policy and lending changes have had on the construction sector.
“January 2016 was a rather weak month for new home building approvals, with both detached house approvals and those for multi-units falling back compared with December,” Garrett said.
“Towards the end of 2015, the residential building industry was hit by a number of unfavourable developments. The major banks increased their mortgage interest rates, credit conditions were tightened for domestic investors and the $5,000 foreign investor fee came into force. This has made it more difficult to deliver new housing supply and [these] figures seem to bear this out.”
Garrett claimed the supply of new housing is one of the biggest issues facing Australia at present and has called on policy makers and credit providers to be more accommodative to the housing industry, a message that is supported by other property lobby groups.
“We have had a record run during 2015 with housing approvals, but the first data for 2016 contains warning signs,” Property Council of Australia chief of policy and housing Glenn Byres said.
“When approvals convert to construction – we fuel jobs, prosperity and economic growth. While record runs never go on forever, the drop in January is large. These figures are a jolt.
“We need to be careful that it doesn’t signal the start of a sustained easing, and that’s why political leaders must avoid a risky intervention in housing markets through changes to negative gearing and capital gains tax.”
During January 2016, total seasonally adjusted new home building approvals saw the largest increase in South Australia (+14.2%), followed by Western Australia (+7.2%) and Victoria (+2.9%).
The volume of approvals fell in New South Wales (-22.9%), Queensland (-13.4%) and Tasmania (-11.1%).
In trend terms, approvals saw a 9.4% decline in the Northern Territory and contracted by 11.4% in the Australian Capital Territory.