The longest housing construction boom in Australian history may have peaked, while apartment developments are still being approved despite concerns of an oversupply.
Approvals for the construction of new homes fell 1.2 per cent in December, and were down 11.4 per cent in the year, the Australian Bureau of Statistics said on Thursday.
Approvals for private sector houses fell 1.6 per cent in December, and ‘other dwellings’, which includes apartment blocks and townhouses, rose 0.9 per cent.
It is clear the peak of the housing boom has passed, but solid construction activity will continue into the second half of 2017, Housing Industry Association chief economist Harley Dale said.
“From 2017/18 we will see a sharper decline in new home building activity, primarily due to the medium/high density segment of the market,” he said.
“This has been an extraordinary cycle for new home building, the biggest and longest in history. A long tail to the cycle will be helpful for the Australian economy.
“It is important to focus in 2017 on ensuring Australia has the correct longer term policy settings to ensure we adequately house our growing and ageing population.”
National Australia Bank chief economist David de Garis warned the figures show apartment approvals had steadied after falls in previous months, despite growing concerns about oversupply across the country.
“It certainly doesn’t suggest that the cycle is on a renewed decline, certainly it reflects a steadiness,” he said.
“We sense that the headwinds facing the apartment sector seem to be building rather than diminishing.”
There were 5,462 dwellings approved in December in greater Melbourne, where there are concerns about oversupply, Mr de Garis said.
“It’s quite a big number when you think about it. You will have to wonder about what proportion of those will actually be built, only time will tell,” he said.