New home approvals at 5-year low as credit crunch bites harder

Figures for November show that new approvals for dwellings are down to their lowest since August 2013 as the chill from the credit crunch becomes even more visible.

Building approvals figures for November 2018 published by the ABS today indicate that 15,465 new dwellings were approved during the month – a decline of 9.1% on October and almost one third lower than 12 months ago (-32.8%).

“With house prices continuing to fall in several key markets, residential building is facing into a challenging 2019. It is important the federal and state governments are aware of these difficulties and tailor their policy interventions wisely over the year ahead,” said Master Builders Australia Chief Economist Shane Garrett.

“The tougher lending environment that has ensued since the opening of the Royal Commission last year is taking an increasingly heavy toll. Homebuyers and homebuilders face much tougher hurdles in accessing mortgages, while small businesses in the building sector are also having their activities disrupted,” he Garrett said.

“Today’s figures indicate that the high density segment of the homebuilding market is experiencing the greatest pain. Approvals for new apartments/units fell by 18.4% during November alone and are now some 53.8% lower compared with a year earlier,” Shane Garrett said.

Tasmania was the only state to see growth in new dwelling approvals during November 2018 (+30.6%) compared with the previous month.

The largest reduction affected Victoria (-14.6%), followed by the ACT (-9.5%) and New South Wales (-9.3%). Declines were a little more measured in Western Australia (-7.3%), South Australia (-4.6%) and Queensland (-4.3%).

New home approvals were unchanged in the Northern Territory during November.