Near record building approvals should allay fears of a housing bubble, according to a large building association.
Despite recent fears of a housing bubble, Peter Jones, chief economist of Master Builders Australia, says building approvals for May 2015 show that housing supply is yet to catch up with demand.
“Growth in residential building can be expected to continue for some time to come, putting downward pressure on house prices which should allay fears of a housing bubble,” he said.
“The boost in dwelling approvals for May is in line with Master Builders forecast that new dwelling commencements will reach record highs well above 200,000 in 2015 and 2016.”
According to the latest data from the Australian Bureau of Statistics, building approvals continue at near record levels with a 2.4% seasonally adjusted rise to 19,414, driven by a 16.6% surge in approvals for high rise apartments.
Disappointingly however, Jones says an 8.4% seasonally adjusted fall in approvals for detached houses signals that impediments to more greenfield land release at state and local government level may be holding back a response to increased demand for detached housing.