Building approvals have fallen further yet again despite having previously hit five year lows, the latest data shows.
On a seasonally adjusted basis, data from the Australian Bureau of Statistics indicates that the number of houses, units and apartments which were approved for construction throughout Australia fell by 8 percent in the month of December from what was already a five year low in November to come in at 13,995.
This represents the lowest level of approvals since May 2013 and means that the overall number of approvals dropped by 23.7 percent over the December quarter.
Whilst the downturn is being led by apartment sector, the pain appears to be spreading to the detached house segment of the market.
All up, the number of apartments approved for construction dropped by 40.1 percent in the December quarter.
Whereas approvals for apartments averaged almost 30,000 per quarter for the three years spanning 2015 to 2017, in the quarter just past they came in at just 17,778.
Detached home approvals dropped by a less dramatic but still significant 7.8 percent.
Concerningly, approval numbers have now reached the point where they are low compared with the recent boom but also by historic standards.
This means that the pace at which new work is coming in is now very low compared with historic standards.
The latest data comes as the banking royal commission is set to hand down its findings later today.
There are fears that residential construction could be further impacted by tighter lending practices associated with any recommendations which will come out of the commission’s findings.
HIA Principal Economist, Tim Reardon said the fallback in approvals will lead to lower levels of building activity going forward.
He says there is a risk that the downturn could be deeper than expected.
“The boom in approvals of apartments is now over,” Reardon said.
“We’ve long been anticipating the current downturn in new home building, but there is a risk it could develop more quickly and strongly than expected.”