<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

Dwelling Approvals

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<p>In some markets and circumstances, declining dwelling commencements can be a fair indicator that prices may be about to follow suit.</p>
<p>I don't want to generalise too much here, because there are of course different sub-markets and sectors.</p>
<p>Nevertheless, note how in Western Australia the dwelling price index peaked in Q1 2014, stalled in Q2 2014, before losing its mojo and beginning to decline in the third quarter of that year, by which time dwelling starts were already on their way down as builders had anticipated the downturn. </p>
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<br><div>Why does this happen? </div>
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<div>Predominantly because developers have become aware that demand is fading, and are understandably reluctant to commence a project if the sale of the end product for an acceptable profit is in doubt. </div>
<br><div><strong><span style="text-decoration: underline;">House commencements robust</span></strong></div>
<div> </div>
<div>Detached houses on average take 6 to 8 months from commencement to completion, although sometimes a bit less than six months in the sprawling greenfield sites of Queensland and the Northern Territory. </div>
<div> </div>
<div>In Western Australia, detached house commencements peaked in the middle of 2014 as it became increasingly clear that the resources sector was slowing significantly and demand for housing was dropping.  </div>
<div> </div>
<div>Elsewhere commencements for detached homes remain fairly robust in trend terms, while in Victoria sentiment appears to be positively serene. </div>
<div> </div>
<div>This is not without reason: population growth in Victoria is tracking at close to 115,000 per annum with inbound interstate migration heading to record highs.</div>
<div> </div>
<div>With variable rate home loans available from well under 4 per cent buyers for new homes in Melbourne should be sourced reasonably comfortably over the next few quarters.</div>
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<br><div>Progressively through the cycles, Sydney is increasingly struggling to provide new build houses at affordable prices - the successive peaks in new house construction are falling - except out towards the western and south-western city fringes where infrastructure is painfully sparse and demand for housing inherently lower. </div>
<br><strong><span style="text-decoration: underline;">Other dwellings - units</span></strong><br><br>The dynamic for the market in attached dwellings is markedly different!<br><br><div>This construction cycle has seen the approval of more high density and 'high rise' apartments than ever before. </div>
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<div>A unit or apartment project might take 15 to 21 months on average to be completed from the point of commencement, which in part explains why completions have taken so long to have an impact through this cycle.<br><br>In Sydney and Melbourne it is usual for apartment projects to take more than 24 months to complete on average, largely due to brownfield site remediation challenges (the figure is much lower in Queensland, for example, at around 19 to 20 months). <br><br>With lead times for new apartments so much longer, developers are often required to ensure a certain percentage of pre-sales before project financing can be secured. </div>
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<div>Commencements of attached dwellings remain strong in New South Wales. </div>
<div> </div>
<div>Overall, in fact, we should expect attached dwelling commencements to remain higher than their long run averages in Sydney (on average, through the cycle), since over the last three decades fewer houses are being constructed, while population growth today is typically higher. For now at least.<br><br><strong><span style="text-decoration: underline;">Concentration risk</span></strong>
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<div> </div>
<div>The Reserve Bank of Australia (RBA) provided some useful analysis of how many inner city apartments are expected to be completed in the next two years.</div>
<div> </div>
<div>In Sydney the number is 10,000, representing a relatively low share of the established dwelling stock when compared to other cites.</div>
<div> </div>
<div>Sydney's construction boom is quite widely dispersed, although as usual there will only be a comparatively small increase in the dwelling stock in the beachside eastern suburbs or the treasured garden suburbs of the lower north shore. </div>
<div> </div>
<div>In LGAs such as Parramatta, on the other hand, there are still thousands more apartment completions expected, and the north west is another region that is expected to suffer from oversupply. </div>
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<div class="separator"><em><span style="text-decoration: underline;">Source: Reserve Bank</span></em></div>
<div> </div>
<div>In Melbourne (16,000) and Brisbane (12,000) the number of expected inner city apartment completions is both higher and more concentrated, and as such will also represent a greater percentage increase in the dwelling stock.</div>
<div> </div>
<div>This has been well enough known for some time, not least by developers with their ears to the ground. </div>
<div> </div>
<div>Sure enough, total attached dwelling commencements are now in decline in Victoria and Queensland, while in Western Australia they peaked all the way back in 2014. </div>
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<br><div>In the southern states the figures for attached dwellings are relatively immaterial, and thus are not included for discussion here. </div>
<div> </div>
<div>In both Melbourne and Brisbane it is easily possible to find plenty of examples of apartments being resold for less than they were initially bought for 'as new', a sure sign of the impending downturn.<br><span><br></span><strong><span style="text-decoration: underline;"><span>The wrap</span></span></strong><br><span><br></span><span>Attached dwelling commencements are likely to decline further through 2017 as developers fear that new off-the-plan purchasers are at risk of not settling, particularly those based offshore. </span><br><span><br></span><span>To date, non-settlements have reportedly remained low, and material losses to banks have not yet resulted.</span><br><span><br></span><span>In theory - at least in areas and property types that people actually want to live in! - while credit remains available markets should be self-correcting in time as dwelling commencements fall, and buyers sensing bargains populate the newly supplied markets. </span><br><span><br></span><span>The Reserve Bank took a detailed look at the apartment sector in its bi-annual Financial Stability Review, and concluded:</span><br><em><br></em><em>"Any oversupply in Australia would be more localised to certain geographic areas, and potential price falls tempered as the population moved to absorb the new (and cheaper) supply of housing in these areas over time."</em><br><em><br></em><span>Of course, central banks rarely predict catastrophes, for fear that they may become self-fulfilling. </span><span>Be vigilant!</span>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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pwargent-M4siyDbqQY

Demand is fading, let the apartment downturn commence: Pete Wargent

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<div>The ABS Consumer Price Index figures confirmed that rental growth nationally has continued to be slow - and slowing - of late, as should generally be expected at this stage in the construction cycle. </div>
<div> </div>
<div>It's important to recognise, though, that the property market is cyclical. Always has been the case, and always must be! </div>
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<div>With annual rental growth declining to +0.7 percent nationally, this was the slowest result in nominal terms since 1994. </div>
<div> </div>
<div>One of the outcomes we can expect to see in an era of low inflation and low interest rates is that things will actually decrease in value from time to time!</div>
<div> </div>
<div>Something that was of course far less likely in say the early 1980s when inflation was blazing along at 10 to 12 percent and interest rates were much, much higher (the typical home loan rate back then was an eye-watering 12 to 14 percent - yowsers). </div>
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<p><img src="/images/2016/08/02/A1.jpg" alt=""></p>
<p><br><span>The plus side for property investors in this era of lower inflation is that mortgage debt has never been so cheap, with ING releasing a record low variable rate product at just 3.79 percent last week. </span><br><br></p>
<div><strong><span style="text-decoration: underline;">City by city</span></strong></div>
<div> </div>
<div>The soft annual result was driven largely by sharp declines in the resources capitals. In Perth, annual rental growth declined by -5.2 percent over the year to June. </div>
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<div>And in Darwin, annual rental growth declined to -6.4 percent. Of the smaller capital cities, Hobart and Canberra have both been somewhat soft rental markets in recent years, but both seem to have turned a bit of a corner, with rental growth in Hobart now picking up in response to tight vacancy rates. </div>
<div> </div>
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<div><img src="/images/2016/08/02/A4.jpg" alt=""></div>
<p><br><strong><span style="text-decoration: underline;">Reality check</span></strong><br><br></p>
<div>Slow rental growth seems to cause a good deal of excitement and sometimes hyperbole in reporting, but it is worth stressing that cyclical rental markets are an integral part of the property market and construction cycles. </div>
<div> </div>
<div>Moreover, although there are many ways to present data to show it in its most unfavourable light (such as cherry picking start dates, dodgy y-axis selection, adjustments for "inflation", or simply focusing on decreasing annual growth rates) over the long term generally rents do increase in areas where there is the strongest demand for housing.</div>
<div> </div>
<div>In fact, despite what you'd think from most articles on the subject, rents are actually at all-time highs in Sydney, Melbourne, Brisbane, Adelaide, and Hobart (even if you must adjust for inflation in the case of the two largest cities). </div>
<div> </div>
<div>Historically nominal rents have rarely declined since inflation was was generally stronger, but this may change in future cycles.<br><br>Plotted below are the rental CPI numbers indexed back to 1972. </div>
<div> </div>
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<p> </p>
<div>Naturally enough city-wide figures mask diverging underlying trends. After taking a bit of a look around Sydney last week - see <a href="https://petewargent.blogspot.com.au/2016/07/traffic-traps-and-infrastructure-gaps" target="_blank">here</a> - I'm fairly sure that off-the-plan unit rents are struggling in the Parramatta LGA, for example. </div>
<div> </div>
<div>On the other hand, if you excitedly confronted renters in Manly with a 'good news story' about weak rents you'd likely be met with a hollow laugh.</div>
<div> </div>
<div>Another point worth acknowledging is that due to the compounding effect, small increases in rent in the short term tend to stack up to become very large increases over time. </div>
<p><a href="/images/2016/08/02/a5.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/08/02/a5.jpg" alt=""></p>
<p> </p>
<div>While I've personally been a fan of the idea of "rent-vesting" - renting and investing in multiple properties - I've also often furrowed a brow when media articles suggest that young folk should just forget buying a home and rent instead.<br><br>This might have worked if reporters were good at timing market cycles and people were good at saving, but generally speaking they haven't been, and they aren't. </div>
<div> </div>
<div>Ultimately home ownership is an effective means of forced saving, and should form an important part of a retirement plan. </div>
<div>
<br><strong><span style="text-decoration: underline;">The wrap</span></strong>
</div>
<div> </div>
<div>Broadly as expected, rental growth remains sluggish.<br><br>Looking at the pipeline of properties under construction this seems dynamic appears likely to continue for the next couple of years at the capital city level. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Rental market cyclically sluggish: Pete Wargent

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>Less than a month ago, one report suggested Australia might have the 'world's worst management' of the virus, and yet now it has transpired that our results are among the very best in the world, alongside New Zealand. </div>
<div>
<br>Whether that's by luck or by judgement - or most likely a bit of both - may only be known in the fullness of time.</div>
<div> </div>
<div>As to how this is impacting real estate searches, there are three main factors to bear in mind.</div>
<div> </div>
<div>Firstly, there are now record low mortgage rates for new borrowers, from just over 2 per cent, and these look set to persist for<em> at least </em>three years. </div>
<div> </div>
<div>Secondly, there's now some potential return for a return of the cobweb effect we saw before the election last year, which may kill new supply, at least in tightly held or blue chip areas. </div>
<div> </div>
<div> </div>
<div>
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<br>Dwelling starts look set to slump to around a 70-year low, and while plenty of aged listings remain on the market, quality new listings are now rather thin.</div>
<div> </div>
<div>For example, Real Estate reported that there was just one new apartment listing in Coogee over the course of a week, which is exasperating for anyone wanting for take advantage of the slowdown.</div>
<div> </div>
<div>And thirdly - a point I've alluded to previously - while Canada, the US, and many developed European and Asian countries have grappled with the spread of the virus, the two countries which are emerging with enhanced reputations as the most desirable to live appear to be New Zealand and Australia. </div>
<div> </div>
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<p><br><span>A 'Lucky Country' indeed.</span></p>
<p><span><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></span></p>
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Dwelling starts look set to slump to new low: Pete Wargent

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<p>According to the Australian Bureau of Statistics (ABS) November 2016 building approvals data there were 17,569 houses and units approved for construction across the country over the month. </p>
<p>Based on the seasonally adjusted series, the number of dwelling approvals rose by 7.0 percent over the month due to a substantial rebound in unit approvals.  Despite an increase in approvals in November, they are -4.8 percent lower over the year and are -18.6 percent lower than their peak in October 2015 when 21,588 houses and units were approved.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/09/chart-1.jpg" alt=""></p>
<p>In November 2016 there were 9,503 houses and 8,066 units approved for construction throughout the country. Over the month, house approvals fell by -0.4 percent while unit approvals increased 17.3 percent. </p>
<p>Unit approvals tend to be lumpy and volatile, which goes a long way towards explaining the 17.3 percent increase in November following a -20.1 percent decline in September and -22.8 percent fall in October of last year. Year-on-year, houses approved for construction were -2.1 percent lower and unit approvals were down -7.8 percent. </p>
<p>Over the current construction cycle, house approvals peaked at 10,649 in April 2015 and unit approvals peaked at 11,763 over the month of October 2015.  November 2016 house approvals were -10.8 percent lower than the April 2015 peak while unit appears have fallen more dramatically, down -31.4 percent from their October 2015 peak.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/09/chart-2.jpg" alt=""></p>
<p>Looking deeper into unit approvals by type, it becomes clear that the surge in new high-rise construction projects has slowed.  This data is split into three segments: townhouses, low-rise units (less than four storeys) and high-rise units (four storeys or higher). </p>
<p>The above chart highlights the volatility in unit approvals and also shows that the recent plunge of unit approvals is being driven by the high-rise unit sector. With ongoing concerns about oversupply of high-rise units in certain inner city markets and slowing value growth for units, it seems that developers are responding by seeking fewer new high-rise unit approvals. Another interesting trend over the past year or so has been the steady upwards trend in townhouse approvals. The substantial increase in high-rise approvals over recent years has occurred at the expense of townhouse and low rise approvals. </p>
<p>With the expected further slowing of high-rise unit approvals there is potential for a lift in townhouse approvals over the coming year.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-3.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/09/chart-3.jpg" alt=""></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/09/chart-4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/01/09/chart-4.jpg" alt=""></p>
<p>The two above charts show the proportion of dwelling approvals that were for units.  The data points to the fact that in most capital cities developers have recently slowed their submissions for unit building approvals. As a proportion of all approvals there have been some significant declines in unit approvals in Melbourne, Brisbane, Perth, Hobart and Darwin over the past six months.</p>
<p>The reality is that this is an appropriate response in most of these cities given how much unit construction has been taking place.</p>
<p>Hobart is the one exception where it could be argued that more unit construction is required, particularly given the booming tourism sector.  Sydney and Canberra have recorded no significant slowdown in unit approvals as a proportion of total approvals over recent months.  Sydney has been approving more units than houses for more than two decades where in most other capital cities the dominance of unit approvals over those for houses is a relatively new phenomena.</p>
<p>Unit approvals are trending lower, particularly for high-rise units, which is an appropriate response so late in the current construction phase. The reality is that at least initially, an increasing proportion of these units approved for construction may not be sold. There remains a substantial pipeline of construction work already underway which should keep residential builders busy for some time. </p>
<p>Should, as we expect, approvals soften further and remain well below their recent heights over the coming years absent a pick-up in non-residential or infrastructure construction, there could be some headwinds for builders and associated businesses. </p>
<p>Housing construction has been a significant driver of economic growth over recent years and a slowdown in this sector could also impact on economic growth over the coming years unless some other large industry segment can pick up the slack. <span> </span></p>
<p><em>Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
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Dwelling approvals bounce in November but don’t expect it to continue: Cameron Kusher

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<p><span>GUEST OBSERVER</span></p>
<p><span>The Australian Bureau of Statistics (ABS) released building approvals data for October 2015 earlier today. </span></p>
<p><span>Focusing just on dwelling approvals, although they were slightly lower than the recent record high levels, the overall number of dwellings approved for construction remain extremely high from a historical standpoint.</span></p>
<p><a href="/images/2015/12/2/Chart-1.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/12/2/Chart-1.jpg" alt=""></span></p>
<p><span>There were 19,652 dwelling approvals in October which was 3.9% higher over the month and 12.3% higher year-on-year.  If we look at approvals over the past 12 months there has been a record high 233,180 approvals which is 17.3% higher year on year.</span></p>
<p><a href="/images/2015/12/2/Chart-2.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/12/2/Chart-2.jpg" alt=""></span></p>
<p><span style="line-height: 1.3em;">In October 2015, there were 9,435 houses and 10,218 units approved for construction nationally.  House approvals are -2.1% lower over the month and -2.3% lower year-on-year.  The more ‘lumpy’ unit approvals have increased by 10.1% over the month and are 30.2% higher year-on-year.  The data highlights the rising prevalence of unit approvals and this is particularly reflected if we look at the annual approvals.  For the first time ever there have been more units approved (117,072) over the past year than houses (116,111).</span></p>
<p><a href="/images/2015/12/2/Chart-3.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/12/2/Chart-3.jpg" alt=""></span></p>
<p><span>With the rising prevalence of unit construction there has also been a record high proportion of high-rise approvals over the past year.  Looking at unit approvals over the past year, 25.5% of approvals were for townhouses, 9.1% were for low-rise (less than four storeys) and 65.4% were for high-rise (four storeys or more).  </span></p>
<p><span>To put the rise in high-rise into context, a year ago 56.5% of unit approvals were high-rise, five years ago the figure was 38.1% and a decade ago high-rise accounted for 36.9% of unit approvals.  Clearly densification and demand for inner city living is driving the rising demand for high-rise units.  </span></p>
<p><span>It’s also important to note that over recent years, Chinese and Indians have overtaken New Zealanders and those from the United Kingdom as our largest sources of migrants.  While New Zealanders and those from the United Kingdom often prefer houses like most Australians, Chinese and Indians are much more accustomed to living in smaller homes and in much higher density environments.  This is another driver of the growing prevalence of high-rise approvals.</span></p>
<p><a href="/images/2015/12/2/Chart-4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/12/2/Chart-4.jpg" alt=""></p>
<p><span>Turning to approvals in the capital cities, there were 17,236 capital city dwelling approvals in October which was 15.9% higher over the month and 16.9% higher year-on-year. There were 6,691 houses and 10,545 units approved for construction over the month.  House approvals fell by -1.8% over the month to be -6.6% lower year-on-year while unit approvals increased 30.8% over the month and were 39.2% higher year-on-year.</span></p>
<p><a href="/images/2015/12/2/Chart-5.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span> <img src="/images/2015/12/2/Chart-5.jpg" alt=""></span></p>
<p><span>Across the individual capital cities, house approvals generally fell over the month however, they have for the most part been trending higher of late but are lower relative to a year ago.  Over the month there were 1,373 approvals in Sydney, 2,244 in Melbourne, 945 in Brisbane, 1,410 in Perth, 540 in Adelaide, 77 in Hobart, 43 in Darwin and 59 in Canberra.  Year-on-year the changes in approvals have been recorded at -3.8% in Sydney, +2.4% in Melbourne, -6.8% in Brisbane, -23.9% in Perth, +24.4% in Adelaide, +6.9% in Hobart, -30.6% in Darwin and -45.9% in Canberra.</span></p>
<p><a href="/images/2015/12/2/Chart-6.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/12/2/Chart-6.jpg" alt=""></span></p>
<p>While housing approvals may be showing early signs of slowing across the capital cities, the same can’t be said for unit approvals which in most cities remain at or close to record highs.  Across the capital cities there were 3,630 approvals in Sydney, 3,640 in Melbourne, 1,671 in Brisbane, 677 in Perth, 561 in Adelaide, 6 in Hobart, 215 in Darwin and 145 in Canberra.  The year-on-year changes in approvals have been recorded at +73.7% in Sydney, +32.6% in Melbourne, +37.4% in Brisbane, -10.8% in Perth, +18.4% in Adelaide, -80.6% in Hobart, +83.8% in Darwin and +0.7% in Canberra.</p>
<p>Based on the data it seems that the demand from developers to seek approvals for units, particularly high rise approvals, is continuing to climb.  Countering this is the slowing in detached housing demand.  As mentioned earlier, the biggest sources of migration to Australia are more comfortable with high-rise development and this coupled with the fact it is relatively more affordable than detached houses seems to be driving the demand. </p>
<p>The challenge from here with value growth now slowing is how many of these approvals will be delivered to the market.  We already have concerns surrounding potential settlement risk for projects already under construction given that banks have recently changed lending requirements to investor.  Keep in mind that unit stock is much more likely to be purchased by investors than detached houses.</p>
<p>Although there has been a slight easing of approvals over recent months they remain at near record highs.  Of course population growth is winding down, particularly overseas migration, which should result in an ongoing improvement in housing supply relative to housing demand.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
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Dwelling approvals remain at near record high levels thanks to high-rise approvals: Cameron Kusher

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<div>Building activity is one of the more complicated data series released by the ABS, so I'll just post the headline figures here. </div>
<div> </div>
<div>Overall the level of residential building activity remained high, increasing quite strongly in 2016 in fact, but nationally it looks as though the peak is now more or less in. </div>
<div> </div>
<div>At the end of the year there was still a historically high number of dwelling units approved and not commenced, but Sydney was beginning to chew its way through the backlog. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/13/A3.jpg" target="_blank">Click to enlarge</a></p>
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<div> </div>
<div>Nationally dwelling commencements remained strong in the fourth quarter of 2016 at more than 57,000 in seasonally adjusted terms.</div>
<div> </div>
<div>But in reality the red hot run is now only being held aloft by Sydney, with commencements declining in Melbourne, Brisbane, and Perth. </div>
<div> </div>
<div>New South Wales saw a total of 19,950 dwellings commenced in the fourth quarter, with Victoria sliding to 16,460, and Queensland dropping sharply to 10,150.</div>
<div> </div>
<div>Commencements have been falling in Western Australia for nine consecutive quarters.</div>
<div> </div>
<div>Plotting the figures in trend terms shows how the residential boom is really just a Sydney story now. </div>
<div class="separator"> </div>
<div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/04/13/A4.jpg" target="_blank">Click to enlarge</a></div>
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<p><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">Supply coming online</span></strong></p>
<div>At the end of 2016 there were still some 219,384 dwellings under construction, including 152,635 attached dwellings.</div>
<div> </div>
<div>The total is slightly lower than the record peak seen in September 2016, indicating that new apartments were already starting to hit the eastern capital city markets towards the end of last year. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/04/13/A1.jpg" target="_blank">Click to enlarge</a></p>
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<div>There were a record 82,857 dwellings under construction in NSW at the end of the year, some 62,040 of them being attached dwellings, and so many of them of the 'egg box' variety.</div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/A2.jpg" target="_blank">Click to enlarge</a></div>
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<div>The actual number of dwellings actually completed in 2016 were high, but themselves hardly alarming, including in NSW (58,730), Victoria (59,977), and Queensland (44,983). </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>While these are big numbers in historical terms, today's largely unnoticed arrivals and departures figures presented some food for thought, with permanent and long term arrivals exploding to 103,570 in February, by some margin the biggest single month on record.</div>
<div> </div>
<div>There was also an unprecedented number of education arrivals in 2016, which may be a coincidence or driven by the lower dollar. </div>
<div> </div>
<div>On the other hand, maybe the government has quietly turned on the immigration taps.</div>
<div> </div>
<div>Remember that most immigrants to Australia head to the two most populous states, which are also home to the two best performing economies and the highest number of job vacancies.   </div>
<div> </div>
<div>Let's hope the new arrivals like egg boxes. </div>
<div> </div>
<div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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Let's hope the new arrivals like egg boxes: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>The CoreLogic home value index, covering the eight major capital cities, posted a robust 0.7% gain in November following a 0.2% rise in October and five consecutive monthly declines. The November rise was across all major capital cities. Prices are still 2.1% below their pre-COVID peak and 3.5% below the peak in late 2017.</p>
<p>The detail shows a broad-based strengthening in the November month. Notably the reopening in Melbourne has finally seen prices turn in the one major market still recording declines a month ago – the 0.7%mth gain surprisingly firm given turnover was still low. Other markets consolidated on previous gains with Adelaide and Perth, the smaller capital cities and regional areas leading the way.</p>
<p>Turnover nationally largely consolidated on its Q3 'pop'. The detail continues to show stark differences, activity in Melbourne only just moving off the extreme lows seen during lockdown but activity across other capital city markets still holding well above pre-COVID levels (and well above new listings suggesting these markets are likely to be very tight in coming months).</p>
<p>Sydney recorded a 0.4% gain to be up 0.3% on a 3mth basis. Units remain a notable weak spot, with prices in this segment down 0.7% in the November month and 1.8% on a 3mth basis, declines accelerating slightly, particularly at the top end of the market. Houses at the lower end of the market have seen the most promising gains.</p>
<p>Melbourne's 0.7% gain was across all segments and building types although prices have generally been firmer for lower priced parts of the market. Despite an apparent large overhang of stock in the inner city, unit prices also posted a solid rise in the month – perhaps a caution that some of the gain may be running off expectations rather than conditions on the ground.</p>
<p>Other markets remain markedly firmer. Prices rose 0.6% in Brisbane, 1.3% in Adelaide, and 1.1% in Perth. The smaller capital city markets also recorded strong gains – Hobart up 1.4% and both Canberra and Darwin up 1.9%. All of these cities except Perth now have prices above their pre-COVID peaks.</p>
<p>The housing market is now moving clear of COVID disruptions with recoveries at different stages across different jurisdictions but gaining momentum everywhere. While there will still be some weak areas, particularly in the Sydney and Melbourne unit markets, the resurgence in activity, the associated lift in market sentiment and more promising outlook for a vaccine remedy to emerge next year suggests broader momentum will remain well supported in 2021. We have recently marked up our price forecasts with a 4% gain now expected in 2021 and a 10% rise in 2022, essentially bringing forward our forecast for a 15% surge that was previously expected to begin in mid-2021.</p>
<p><strong>MATTHEW HASSAN </strong>is a Senior economist at Westpac</p>
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Australian dwelling prices lift: Matthew Hassan

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<p>Building approvals for private sector houses rose for the fourth consecutive month in October and were at the highest recorded level since February 2000, according to data released by the Australian Bureau of Statistics.  </p>
<p>Building approvals saw a surprise 3.8 per cent rise in October, with many forecasting a contraction following a huge September spike.</p>
<p>Westpac had forecast approvals would slip back three per cent. </p>
<p>Daniel Rossi, director of construction statistics at the ABS, said the continued strong demand for detached housing follows the relaxation of COVID-19 restrictions in most states and territories.</p>
<p>"Record low interest rates and a range of Federal and state-based incentives are also providing support for the housing sector,” Rossi said.</p>
<p>Housing Industry's Association's Craig Jennion said the figures show the start of the impact of stage one of HomeBuilder.</p>
<p><span class="css-901oao css-16my406 r-1qd0xha r-ad9z0x r-bcqeeo r-qvutc0">Last month the total number of dwelling approvals rose by 15.4 per cent to be 8.8 per cent higher than a year ago.</span></p>
<p>The October gains of nearly four per cent put approvals over 14 per cent higher than they were this time last year.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/DEC/1/October%20ABS%20building%20approvals.jpg" alt=""></p>
<p>There were a further 10,692 private sector houses approved, up 3.1 per cent from September and 31.7 per cent from 12 months ago.</p>
<p>It's now back to back approvals of over 10,000 private sector houses. There hadn't been a single month of over 10,000 private sector houses approvals since June 2018.</p>
<p>There were 16,584 apartments approved, 3.8 per cent up from last month and 14.3 per cent up from the last year.</p>
<p>The biggest spike was seen in New South Wales where a further 32 per cent of apartments were approved from last month, with 4695 units approved.</p>
<p>Victoria unsurprisingly contracted from its big September approval figures, back 15 per cent but still had nearly 300 more apartments approved than New South Wales (4946)</p>
<p> </p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2020/DEC/1/Approvals%20by%20state%20ABS.jpg" alt=""></p>
<p> </p>
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jrobinson-rf4aSBido9

House approvals rise to 20 year high in October

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<p>EXPERT OBSERVER</p>
<p>Dwelling approvals came in below expectations with a 1.6% drop, weaker than both the consensus view of 0.0% and Westpac's view of a 2% gain. The fall comes after dwelling approvals surged in July by 12% from an 8yr low in June. Approvals are still tracking at subdued levels overall, with monthly approvals still down 14.6% vs December 2019.</p>
<p>The July result represented a catch-up, as approvals delayed by the initial nation wide lock-down were eventually processed by city councils. This raised the risk of an unwinding leading into August results.</p>
<p>Westpac's forecast noted uncertainty over varied COVID effects, with Victoria moving into a 'second wave' lockdown but other states continuing to re-open. Additionally, we saw support for approvals from the Federal government's HomeBuilder scheme – a stimulus programme that provides $25k grants to eligible owner-occupiers buying a new home (or renovating an existing home). The HIA reported a sharp jump in new home sales through June - August (+60% for the three months combined compared to the three months to May).</p>
<p>Private detached house approvals were supported by the scheme, posting a 4.8% increase which marked a 12.4% improvement on year.</p>
<p>The 11.1% fall in private unit approvals led the decline in August, with 'high rise' approvals down 11%, and 'low rise' unit approvals down 12%. This fall partially offset a 23% rise in July, with significant month-on-month volatility expected due to the bundling of unit approvals.</p>
<p>Across the states, NSW approvals continued a volatile trend, posting a decrease of 14.2% in August after approval delays contributed to a 32% increase in July. Tas (-26.2%) and SA (-4.8%) also declined. Gains were particularly strong in WA (+33.8%) and QLD (+8.1%), though broadly across the states approvals compared to a year ago.</p>
<p>As we expected, the impacts of the Vic lockdown beginning early August were not reflected in this release. The state posted a moderate increase of 1.8% due to the time lag, though impacts will surely be seen in coming months.</p>
<p>The value of alterations and additions to residential buildings reported a strong result of a 7% increase, the highest level recorded since April 2016. This segment is seeing support as the 'work from home' trend continues, and workers change their discretionary spending habits.</p>
<p>Large public projects in QLD and NT boosted the value of non residential building approvals by 40.7% in August. However, big double-digit swings in recent months continue to make discerning an underlying trend difficult.</p>
<p>In the near-term, there is the potential for another round of weakness - albeit concentrated in Victoria (which accounts for 35% of national approvals), which has been hit by the second lock-down. Other headwinds will challenge housing approvals into 2021, notable is the sharp slowing of population growth as net overseas migration plummets due to the closure of our international border.</p>
<p><strong>MATTHEW HASSAN </strong>is a Senior economist at Westpac</p>
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Dwelling approvals face weakness: Matthew Hassan

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<p>EXPERT OBSERVATION</p>
<p>The impact of HomeBuilder is now emerging in the ABS Building Approvals Data and there is a significant divergence between the outlook for detached and multi-unit dwellings.</p>
<p>After a number of years of decline, building approvals in Western Australia increased by 32.9 per cent in the month of August. This is consistent with other leading indicators that show that HomeBuilder and the State Government’s Building Bonus have stimulated demand for new homes,” added Ms Lillicrap.</p>
<p>Western Australia also had a very short pipeline of work and these approvals will lead to the commencement of building work on the ground within weeks. This surge lifts the number of approvals to levels last experienced in 2018.</p>
<p>Queensland also saw a 13.4 per cent increase in detached building approvals, confirming that it is also experiencing a surge in new work entering the building pipeline, also from a low base.</p>
<p>Other regions are yet to see the pickup in activity due to HomeBuilder. This reflects a range of factors including, longer processing times with local councils and delays in the finalisation of building plans between the customer and builder, and a stronger pipeline of existing work.</p>
<p>New Home Sales data also suggests that detached house approvals will continue to grow over coming months and across all jurisdictions.</p>
<p>Multi-unit approvals fell by 12.9 per cent in the month to be 14.1 per cent below this time last year.</p>
<p>The small number of multi-unit projects that are gaining approval at this time are likely to have commenced the planning and building approval process years ago.</p>
<p>The multi-unit market has cooled since 2018, after several years of record levels of construction. Activity in this part of the market is likely to remain depressed until there is greater certainty about the pathway for overseas migration to be restored.</p>
<p>In seasonally adjusted terms, the number of detached dwelling approvals during August 2020 compared to June, increased in Western Australia (+32.9 per cent), Queensland (+13.4 per cent) and New South Wales (+0.2 per cent. They declined slightly in Victoria (-0.8 per cent) and South Australia (-0.9 per cent).</p>
<p>The number of multi-unit approvals increased in Western Australia (+43.9 per cent) and Victoria (+6.5 per cent). They declined in Queensland (-3.3 per cent), South Australia (-23.9 per cent) and New South Wales (-31.9 per cent).</p>
<p><strong>Angela Lillicrap </strong><em>is an HIA Economist</em></p>
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