Total dwelling approvals moved back into positive territory this April, up 4.4% over the month, measured in seasonally adjusted terms, according to a new report by Master Builders Australia.
“Monthly dwelling approvals data can be lumpy but the latest approvals data suggests there are still projects entering the pipeline and that residential building activity should remain high against historical standards in 2017,” said Matthew Pollock, Master Builders Australia’s national manager of economics and industry.
The peak in residential building has likely passed. However, the latest approvals data supports the expectation for a moderate fall in residential building activity to levels more aligned with underlying demand over the next few years, according to Pollock.
“On the other hand, auction clearance rates remain very high in Sydney and Melbourne and there is evidence that demand for housing is still in excess of supply in a number of jurisdictions. This is putting upward pressure on house prices and will continue to do so if new housing construction once again falls behind,” Pollock said.
To ensure that supply constraints do not place pressure on future house prices, it’s important that the federal government’s housing affordability measures, via the new budget, are passed on to unlock funding. This will “support reforms which speed up the delivery of residential land and reduce costs during the development phase,” Pollock said.