The number of new residential building approvals took a hit in November, official figures have revealed.
Figures from the Australian Bureau of Statistics (ABS) show that total building approvals fell by 12.7% over November. Total building approvals are now down 8.4% on a year ago.
The drop in new residential building approvals was driven by a 23% fall in approvals for “other dwellings”, predominantly multi-unit dwellings. Approvals for the construction of houses remained relatively steady, dropping by just 0.5% in November.
However, Housing Industry Association (HIA) economist Geordan Murray said whilst the fall in “other dwelling” approvals appears substantial, it is important to recognise that it followed on from a particularly strong increases in September and October.
On the other hand, Murray says it is clear from these figures that the peak in new residential building approvals is over, which could lead to challenges in the second half of 2016.
“This result reaffirms that the peak in the approvals cycle is now likely to be behind us. While the large volume of work that remains to be done on projects currently in the pipeline will sustain a high level of building activity throughout the first half of 2016, the latter part of the year appears set to take a step back from the record levels of activity seen in 2015.
“This will add to Australia’s growth challenge in the second half of 2016. The growth in residential building activity over the last few years has made a substantial contribution in offsetting the contraction in mining investment. With the residential building cycle at the peak, we need to see other sectors pick up the baton.”