Housing approval growth has continued into the new year, though Australia’s longest housing construction boom appears to be moderating.
Approvals for the construction of new homes rose 1.8 per cent in January to 17,412 dwellings, beating market expectations of a 0.3 per cent fall.
However, housing approvals over the 12 months to January were down 12 per cent, according to data from the Australian Bureau of Statistics, likely providing relief to regulators worried about a growing asset bubble.
The gains for January were led by a 6.2 per cent increase in approvals in what are categorised as ‘other dwellings’, which includes apartment blocks and townhouses.
Approvals for private sector houses fell three per cent, and have now fallen for two consecutive months.
“The 12 month trend in dwelling approvals certainly appears to be weakening, with the level of detached dwelling approvals now sitting closer to the pace seen in mid-2013,” JP Morgan economist Henry St John said.
“While some institutions are still lending toward such activity, it seems relatively safe to say that approvals have peaked for the cycle.”
The decline in house approvals is also seen as significant as it comes amid record low interest rates.
National Australia Bank chief economist David de Garis said this possibly reflects a flow-on from concerns about likely surplus apartments in the next six to 12 months, but the lower supply may also be partly responsible for the continued strong performance of house prices.
While apartment approval numbers tend to be volatile on a monthly basis, the large number of approvals, particularly in NSW, means housing construction will contribute to growth again this year, economists said.