The number of building approvals for dwellings in July plummeted by 17.2%, down 25.9% on the year, the latest ABS figures showed, foreshadowing a likely chronic shortage of housing from 2023 onwards.
But the most worrying fall was the slump of 43.5% in private sector apartments to their lowest level since 2012. So, does that mean now is a good time to invest – or is better to do it later?
Michael Yardney, chief executive of Metropole Property Strategists, said it’s more an argument to make sure you buy well.
“There’s a lack of supply on the market even now, and especially of A-grade property,” Yardney told Domain. “As a result, this is a time to pick the eyes out of the market, especially as it’s not too competitive at the moment, with other buyers holding back because of uncertainty and interest rate rises. So, it would be good to invest now before interest rates stabilise later this year or next, and people come back into the market.”
With building costs rising and approvals down, he said apartments would likely be 20% more expensive later, making buying now more of a wise move, that is, if it suits the buyer’s financial circumstances and investment strategy.
Darren Venter, of The Investors Agency, said that another plus for investors was that the current tightness of supply and the future prospects of a more acute housing shortage would mean that growth in capital values would be assured.
“When there are low listings and high demand, you can expect prices to grow,” Venter told Domain. “So, it can be a good idea to buy in those conditions. It can be more challenging, but it can be more beneficial to do so. An easy way to gauge demand is by looking at how quickly properties are selling or at the number of listings that are being bought. Another tactic is to shop on the fringes of these markets, where more stock is available and easier to buy. In time, those markets will also grow as soon as the trend catches up.”
According to the ABS data on dwelling approvals, all states bar South Australia saw declines – Western Australia by 36.9%, Victoria by 17.4%, NSW by 16.2%, Tasmania by 14.5%, and Queensland by 13.7%.
