Dwelling

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Newly approved housing supply has moved to new record heights, with 214,331 dwelling approvals recorded nationally over the past year.
The proportion of these approvals which were for units is also at a record high, accounting for 45.9% of all approvals.
The surge in dwelling approvals has coincided with very low interest rates and surging demand from the investment segment of the market. 
Across the combined capital cities more than half of all dwelling approvals are for units and in each capital city (except Adelaide, Perth and Hobart) more than 50% of approvals over the past year were for units. 
Data from the 2011 Census shows that across the country units are more than twice as likely to be rented as houses. This would indicate a clear preference from the investment segment which is currently so active, for units over houses.
While the number of new dwellings being approved is significant, it is worthwhile examining on a smaller scale the regions where the new housing supply is being approved. Looking at dwelling approvals across SA4 regions of the country, we have listed the top 20 regions for approvals for both houses and units over the 2014-15 financial year to April 2014.
For houses, the region with the greatest number of approvals over the financial year to-date was South East Melbourne (which includes council regions such as Casey and Cardinia) with 4,874 approvals. Looking at the top 20 list published, 15 of the 20 regions listed are located within capital cities with only Geelong, Sunshine Coast, Gold Coast, Latrobe-Gippsland and Bunbury in non-capital city areas. The top 20 list shows 3 NSW regions, 6 regions from Vic, 5 regions from Qld, 1 SA region and 5 regions from WA.
<a href="/images/2015/06/30/2015-06-22--01--house-approvals-2014-15-financial-year-SA4-regions.jpg" target="_blank">Click to enlarge</a>
 <img src="/images/2015/06/30/2015-06-22--01--house-approvals-2014-15-financial-year-SA4-regions.jpg" alt="">
Turning to unit approvals, the list highlights the magnitude of approvals in Inner Melbourne with 12,516 approvals so far this financial year.
This region is already seeing a huge volume of new construction and the pipeline just keeps growing.
To put the volume of approvals in perspective, Brisbane Inner City with the second highest number of approvals (5,808) has less than half as many unit approvals as Inner Melbourne.
The Gold Coast is the only non-capital city area listed amongst the top 20 regions for unit approvals. Looking at the state-by-state breakdown there are 6 NSW regions listed, 6 Vic regions, 4 Qld regions, 1 SA region, 2 WA regions and 1 ACT region.
<a href="/images/2015/06/30/2015-06-22--02--unit-approvals-2014-15-financial-year-SA4-regions.jpg" target="_blank" style="line-height: 1.3em;">Click to enlarge</a>
<img src="/images/2015/06/30/2015-06-22--02--unit-approvals-2014-15-financial-year-SA4-regions.jpg" alt="">
 
With the pipeline of construction activity remaining high and much of it high-density development, the multiplier effect from heightened construction activity should continue for a number of years. 
Of course the biggest hurdle may start to be achieving necessary presales for these projects commence particularly given that many financial institutions are now starting to tighten their lending practices on the request of APRA. 
With a particular focus on investment mortgages this may have an impact on demand from investors who are seemingly a key driver of the surging demand for inner city units.
Cameron Kusher is RP Data’s senior research analyst. Follow Cameron on Twitter <a href="https://twitter.com/cmkusher" target="_blank">here</a>. 
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Surge in dwelling approvals: Cameron Kusher

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Australia's capital city dwelling values were 9.8% higher over the financial year, according to the latest CoreLogic RP Data update. The previous 2013/14 financial year recorded a slightly higher rate of growth at 10.1%.  
Housing values rebounded in across the June quarter with dwelling values rising 2.0%t to be 9.8% higher over the year. 
The rate of capital gain was slightly higher over the second half of the year (5.1%) compared with the first half (4.5%) highlighting that the housing market has gathered some momentum during 2015, CoreLogic RP Data’s head of research, Tim Lawless, who believes the interest rates cuts in February and May have contributed in pushing capital gains higher. 
“Growth conditions had been moderating from April last year through to the end of January 2015.
"With the RBA cutting the cash rate in February, there was an instant buyer reaction across the Sydney and Melbourne housing markets where auction clearance rates surged back to levels not seen since 2009.
"Capital gains once again accelerated and we are now seeing Sydney and Melbourne homes selling in record time; Sydney homes are selling in just 26 days and Melbourne homes are selling in 32 days.” 
But while Sydney and Melbourne have seen dwelling values increase by 16.2% and 10.2% over the financial year respectively, every other capital city has seen growth of less than 5 per cent and dwelling values are down over the year in Darwin (-2.9%) and Perth (-0.9%). 
<a href="/images/2015/07/01/Screen%20Shot%202015-07-01%20at%209.58.14%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/01/Screen%20Shot%202015-07-01%20at%209.58.14%20AM.png" alt="">
Since dwelling values started rising in May 2012, Sydney dwellings have seen a 43.1% surge in values and Melbourne values are up by 25.9%. 
Despite emerging softer market conditions in Perth, dwelling values are currently up 12.8% over the cycle which represents the third highest growth rate across the capitals. 
"Simultaneously, Brisbane’s property market has shown the fourth highest rate of growth at 12.4%, followed by Adelaide (10.4%), Hobart (9.6%), Darwin (8.9%) and Canberra (8.8%). 
“The three tiers of housing market performance can be best explained by economic and demographic factors where it’s no coincidence that New South Wales and Victoria are recording the strongest economic conditions coupled with the strongest rates of migration which is fuelling housing demand. 
"Looking forward to the next financial year, Mr Lawless said it is difficult to imagine Sydney maintaining such a rapid pace of capital gains.
“Not only is affordability becoming a challenge for many sectors of the market, but yields are substantially compressed, rents are hardly moving and investors are facing tighter financing conditions from lenders.
“In the absence of a trigger event, such as a sharp rise in the jobless rate, higher interest rates or an external shock, it is unlikely we will experience a significant correction in dwelling values.
"However, the longer this run of growth continues across our largest capital cities, the more susceptible the housing market becomes to changes in the economy or broadly across household finance,” Tim Lawless said.<a href="/images/2015/07/01/Screen%20Shot%202015-07-01%20at%209.58.14%20AM.png" target="_blank" style="line-height: 1.3em;"> </a>
 
{mijopolls 118}
 
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