Building approvals hit a three month high in October, new figures have revealed.
According to the latest Building Approvals data from the Australian Bureau of Statistics (ABS), 19,652 dwellings were approved for construction over the month of October, up 3.9% on September.
Mortgage Choice chief executive, John Flavell said the spike in dwelling construction could be largely attributed to the sudden surge in the number of apartments that were approved for construction.
“Throughout the month of October, an incredible 10,091 private sector dwellings excluding houses were approved – up 10.6% on the month prior,” he said.
“The last time more than 10,000 apartments and 19,000 units were approved for construction was back in July 2015.
“This ongoing strength in the construction sector shows how robust and demanding the property market is at the moment.”
Moving forward, Flavell said it was important that the type of dwellings being approved for construction were the “right” type.
“In Australia, we are wedded to the idea of having a three bedroom, free-standing home with a backyard,” he said.
“While apartment construction is helping to meet some of the demand, the reality is, the demand for houses is not going to disappear overnight. As a country, we need to make sure we are building the right type of dwellings that can cater to the property demand.”
Looking at the data, 9,349 private sector houses were approved for construction, down 2.1% on the month prior. The last time 9,300 private houses were approved for construction was in September 2014.
Shane Oliver, senior economist for the Housing Industry Association (HIA), said the industry needs to rally against the “taxation burden” placed on residential construction if we are to continue to boost housing supply.
“The performance of new home building is commendable given that the taxation burden on the sector is so high. The challenge of consistently delivering a pipeline of affordable new housing stock is made much more difficult by taxation and other supply hurdles,” Oliver said.
“Latest HIA projections indicate that new home building is likely to have peaked in 2014/15, and has started to decline from these record levels. In this context, it is vital that more favourable policy settings are implemented to allow for an orderly adjustment in activity.”
