Home building approvals have rebounded, driven by a strong surge in apartment blocks.
Approvals for the construction of new homes rose 11.4 per cent across Australia in October, following an 11.2 per cent fall in September, official figures show.
Approvals for private sector houses fell 0.2 per cent in the month, but other dwellings, including apartment blocks and townhouses, rose 31.3 per cent.
JP Morgan economist Tom Kennedy said the figures were very strong, but expects they will stabilise over the long term.
“When you look into the data, the multi-storey buildings like apartment blocks, that’s where all the strength and weakness has been over the past few months,” he said.
“The number of single family dwelling units is still tracing close to all time highs, although it has cooled a little bit in the past few months, so it’s nothing to get too alarmed about.
“We’re really trying to look through the volatility of the past few months.”
Over the 12 months to October, building approvals were up 2.5 per cent.
The supply of housing will continue to rise, which will slow house price rises, St George senior economist Hans Kunnen said.
“The basic story is that building approvals are well above their 10 year average, that tells us that construction work going into 2015 will remain firm,” he said.
“It adds to the supply of housing so for those who are worried about house prices it is helpful.”
Mr Kunnen also expects national housing price rises to slow in the short term.
“If you’re looking at it from a Sydney perspective they are not likely to decline in the near term, but on a national perspective, possibly,” he said.
“Because of the low interest rates, the population growth and the overall undersupply of housing, actual declines in housing prices on a year-on-year basis will be harder to achieve.”