<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>GUEST OBSERVER</p>
<p>Approvals rose 1.8 percent in Jan, retracing most of a downwardly revised 2.5 percent fall in Dec.</p>
<p>The result was above market expectations of a 0.5 percent dip.</p>
<p>As always, January housing data should be treated with extra caution as the summer low season amplified what are already volatile month to month estimates.</p>
<p>Adding to this, the detail showed the Jan monthly gain was driven by ‘units’ – the lumpier, more volatile component up 6.2 percent/mth. In contrast, private detached house approvals were down 3 percent.</p>
<p>Looking by state, the rebound was led by a 24 percent jump in NSW, again suggesting volatility and seasonal adjustment are exaggerating the picture here.</p>
<p>Notably, the weakness in private sector house approvals was broadly-based with all the major eastern states recording declines. </p>
<p><span>Details</span> <br>Private houses  -3%mth, -9.4%yr<br><span>Private 'units'    6.2%mth, -14%yr          </span></p>
<p>NSW     24%mth, 9.4%yr<br><span>Vic       -5.3%mth, 1.5%yr<br></span><span>Qld       -11.9%mth, -45.4%yr<br></span><span>WA       3.5%mth, -21.8%yr<br></span><span>SA        6.5%mth, -16.9%yr       </span></p>
<p>Alteration &amp; additions^   -17.7%mth, 2.4%yr<br><span>Non-residential^                         -14%mth, -13.8%yr<br></span><span>^ value </span></p>
<p><span><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></span></p>
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Matthew_Hassan-HHWHptmrw4

Australian dwelling approvals approvals rise 1.8 percent in Jan: Matthew Hassan

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<p><span>GUEST OBSERVER</span></p>
<p><span>The latest ABS housing approval data for NSW indicates a big drop over five months giving the new Housing Minister a big challenge.</span></p>
<p><span>The ABS t</span><span>rend data indicates that between July 2016 and December 2016 home approvals in NSW dropped by 24% </span><span>and apartment approvals by 35 percent.</span></p>
<p><span>These </span><span>figures will give the new Housing Minister, Anthony Roberts, a big challenge as he acquaints himself with his </span><span>new portfolio.</span></p>
<p><span>The home approvals by trend for December 2016 were 4,950 compared to the July 2016 figure of 6,545. </span><span>This is a drop of 1,595 or 24 percent over 5 months. </span></p>
<p><span>Most of the drop was with apartment approvals which dropped from 4,1</span><span>33 in July 2016 to 2,668 in December 2016. This is a drop of 1,465 or 35%.</span></p>
<p><span>The trend graphs illustrate a steady drop over the last 5 months. </span><span>It will be important that the new NSW Housing and Planning Minister brings in some new policies and improvements to the planning system to </span><span>reverse the current trend.</span></p>
<p><span>It would appear that the Greater Sydney Commission (GSC) which began in February 2016 has not been </span><span>able to influence housing approvals and that the confusion with local council amalgamations may have </span><span>contributed to the slow down.</span></p>
<p><span>A number of Urban Taskforce members have reported difficulties in getting approvals from local councils and from the GSC’s planning panels even in areas where the state governm</span><span>ent has encouraged </span><span>development.</span></p>
<p><span>The recent </span><span>release of the District Plans by the GSC has added to uncertainty as they seem to restrict housing in a number of areas. The August rezoning review issued by the Government has also made it more difficult to submit planning </span><span>proposals.</span></p>
<p><span>The big drop in h</span><span>ousing approvals comes just as the new Premier, Gladys Berejiklian, has stated that housing supply is the key to housing affordability and appointed Anthony Roberts as Housing Minister to </span><span>tackle the supply issue.</span></p>
<p><span>Minister Roberts is in an ideal position </span><span>as both Housing and Planning Minister to take some strong action to ramp up housing supply in the state. He needs to look at the restrictive zoning in the District Plans that stops new housing in district and strategic centres and in out of date industria</span><span>l areas in inner Sydney.</span></p>
<p><span>The Minister should also use the Greater Sydney Commission to fast track housing approvals for large </span><span>projects over the value of $20 million. He should also look at setting up planning centres of excellence in each of the six Syd</span><span>ney districts to drive housing supply.</span></p>
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<p><span>In the current boom economic times</span><span>, Sydney should be completing 40,000 new homes a year but the </span><span>highest number to date has only been 31,000.</span></p>
<p><span>The Urban Taskforce is keen to work with Minister Roberts to develop f</span><span>ast track processes to lift housing </span><span>supply. We are also keen to outline a plan to complete 4,000 new affordable homes a year for Sydney.</span></p>
<p><span>See below New monthly private sector home approvals NSW graph based on ABS figures: </span></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.41.36%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="https://www.urban.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.41.36%20AM.png" alt=""></span></p>
<p><span><em>Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.</em></span></p>
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mick.cee-iDmgDDAmu8

Housing Minister must act as approvals dropping fast: Chris Johnson

<html><body><div class="page" title="Page 1">
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<p>GUEST OBSERVER </p>
<p>Dwelling approvals posted a slight 1.2 percent decline in Dec in line with expectations (Westpac –1 percent, market –1.5 percent).</p>
<p>The Dec dip follows a 7.5 percent gain in Nov that was a partial rebound from a sharp 23 percent drop over the previous 3mths. </p>
<p>That earlier move marked the first definitive sign that Australia's high-rise driven building boom was starting to turn down.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.17.36%20AM.png" target="_blank">Click to enlarge </a></p>
<p><img src="https://www.urban.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.17.36%20AM.png" alt=""></p>
<p>The Nov bounce and Dec stablisation scales back the pace of the decline but leaves the downtrend intact – trend approvals are now down 13%yr.</p>
<p>The Dec mix showed further weakness in private sector houses (–1.6%mth to be down –9.6 percent/yr) with ‘units’ up slightly (+0.9 percent/mth but still down –13 percent/yr). Our estimates suggest high rise approvals were up about 4%mth with 'low rise' broadly stable.</p>
<p>High rise is still at the epicentre of the slowdown although the softer picture on non high rise approvals is notable particularly for construction activity in 2017 (the longer time frame on projects means the high rise impact falls more into 2018).</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.19.49%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.19.49%20AM.png" alt=""></p>
<p>The state detail suggests the high rise downturn is more abrupt for NSW and Qld with Vic approvals in this segment more volatile around a milder downtrend. For ‘non high rise’ approvals the weakness is much more pronounced in Qld and WA with approvals flattening out in NSW and Vic rather than trending materially lower.</p>
<p>Given the aforementioned timing differences, that suggests the path for construction activity will be very different across states with near term weakness concentrated in the mining states, and the high rise slowdown having more of an impact on NSW and Qld in 2018.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.20.46%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.20.46%20AM.png" alt=""></p>
<p>The value of renovation approvals surged 15.2 percent in Dec to be up 12.3 percent/yr. The renewed uptrend and detail suggests there was a 'pause' in activity in NSW and Vic, possibly relating to election uncertainty.</p>
<p>The value of non res building approvals edged up 0.7 percent but were down 6.7%yr. Extreme lumpiness makes it difficult to be sure of the underlying trend although the value of approvals for Q4 as a whole was down across most segments with a notably sharp fall in NSW.</p>
<p>Overall, aggregate approvals continue to track in line with our expectation of a significant high rise driven slowdown. The mix has been a little weaker for non-high rise approvals though suggesting construction activity may be a touch softer in the second half of 2017.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.21.42%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/02/03/Screen%20Shot%202017-02-03%20at%208.21.42%20AM.png" alt=""></p>
<p>As we highlighted in a several pieces last year, the long lags on high rise projects mean the downturn in this segment will not impact construction activity until well into 2018 with work done still relatively well supported in 2017. We will be expanding on this research in coming months to provide a clearer view of the likely path for construction activity and completions across the major states. </p>
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<p><span><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></span></p>
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December dwelling approvals decline: Westpac's Matthew Hassan

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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>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>
<p><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px;"><a href="/images/2016/10/17/BA1.jpg" target="_blank">Click to enlarge</a></span></p>
<p><img src="/images/2016/10/17/BA1.jpg" alt=""></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>
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<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>
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<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>
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<div>Elsewhere commencements for detached homes remain fairly robust in trend terms, while in Victoria sentiment appears to be positively serene. </div>
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<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>
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<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>
<br><div class="separator"><a href="/images/2016/10/17/BA2.jpg" target="_blank">Click to enlarge</a></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>
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<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>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>
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<div>In Sydney the number is 10,000, representing a relatively low share of the established dwelling stock when compared to other cites.</div>
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<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>
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<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><a href="/images/2016/10/17/RBA.jpg" target="_blank">Click to enlarge</a></div>
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<div class="separator"><em><span style="text-decoration: underline;">Source: Reserve Bank</span></em></div>
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<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>
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<div>This has been well enough known for some time, not least by developers with their ears to the ground. </div>
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<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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<div><a href="/images/2016/10/17/BA3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/10/17/BA3.jpg" alt=""></div>
<br><div>In the southern states the figures for attached dwellings are relatively immaterial, and thus are not included for discussion here. </div>
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<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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Demand is fading, let the apartment downturn commence: Pete Wargent

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<p>GUEST OBSERVER</p>
<p>Dwelling approvals outstripped expectations again in August, with a small 1.8 percent pull back from a big spike in July (+12 percent revised up slightly from +11.3 percent).</p>
<p>The consensus forecast was for a more material 6 percent fall. The July update was the second highest level of approvals on record. The August pull back still leaves approvals at the fourth highest level on record.</p>
<p>Expectations centred on high rise approvals which drove the July gain and which tend to be volatile due to large projects. This segment instead held up better than expected with our estimates pointing to about a 10 percent drop in seasonally adjusted terms that still left high rise approvals about 25 percent above their June level.</p>
<p>The rest of the detail showed a decent rise in ‘low-mid rise’ approvals, we estimate up about 7-8 percent in the month with the more stable detached house approvals segment down 1.3 percent/mth. Combine approvals ex high rise were up slightly, we estimate up 1.2 percent/mth. To the extent that this measure is more reflective of underlying trends it is pointing to a modest decline running at about 1-1.5 percent a month.</p>
<p>By state, approvals dipped 2.3 percent in NSW but were up slightly in Vic and Qld with big monthly declines coming in WA and SA. Notably, within the NSW estimates ‘unit’ approvals were still the second highest monthly level on record.</p>
<p>The value of renovation approvals also softened in Aug, down 0.9 percent. The value of non res building approvals recorded a bigger decline down 24 percent/mth and 13 percent/yr.</p>
<p><br>Overall, the continued high level of approvals points to a dwelling construction holding up stronger for longer although a softening is still expected to come through in coming months.</p>
<p><span>Details</span></p>
<p>Private houses –1.3%mth, –6.5%yr</p>
<p>Private 'units' –3.6%mth, 26.3%yr</p>
<p>NSW –2.3%mth, 37%yr</p>
<p>Vic 1.8%mth, 14.7%yr</p>
<p>Qld 0.6%mth, 13.5%yr</p>
<p>WA –14.3%mth, –36.5%yr</p>
<p>SA –10.6%mth, –22.6%yr</p>
<p>Alteration &amp; additions^ –0.9%mth, 1.2%yr</p>
<p>Non-residential^ –24.3%mth, –12.9%yr<br>^ value</p>
<p><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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Australian dwelling approvals August 2016: Westpac's Matthew Hassan

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<p>The Australian Bureau of Statistics has released the latest building approvals data for August 2016. </p>
<p>The data showed that the strength in residential dwelling approvals is continuing. </p>
<p>Over the month there were 20,788 dwellings approved for construction which was a moderate -1.8 percent lower over the month but 10.1 percent higher than the number in August last year.</p>
<p><a href="/images/2016/10/04/Chart-1-580x211.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Chart-1-580x211.jpg" alt=""></p>
<p>The 20,788 dwelling approvals were split between 9,475 houses and 11,313 unit approvals.  Over the past year, on seven occasions there have been more units approved for construction than houses which highlights the growing shift towards densification with a particular emphasis on high rise unit developments.  The number of houses approved for construction fell by -0.9% over the month to its lowest level since March 2014. </p>
<p>House approvals in August 2016 were -5.8% lower than at the same time in 2015.  The number of units approved for construction was slightly lower over the month, down -2.5% however, compared to the number in August 2015 they were 28.3% higher. </p>
<p>Despite the slight fall in approvals over the month they still remain at very high levels on an historic basis indicating that there remains a level of confidence from property developers that they can continue to bring new stock to the market and attract a sufficient level of demand to make a profit.</p>
<p><a href="/images/2016/10/04/Chart-2-580x212.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Chart-2-580x212.jpg" alt=""></p>
<p>Focusing on unit approval over the month, 26.9 percent of all approvals were for townhouses, 5.1% were low-rise units (defined as less than four storeys) and 68.0 percent were for high-rise units (four storeys or higher). </p>
<p>To highlight the prevalence of high-rise unit development, if we look over the four years to August 2016 there have been 112,153 townhouses approved for construction, 43,471 low-rise units and 232,232 high-rise units. </p>
<p>High-rise unit approvals over that four year period have been more than double the number of townhouse approvals which historically been the dominant type of unit approval.</p>
<p><a href="/images/2016/10/04/Chart-4-1-580x209.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Chart-4-1-580x209.jpg" alt=""></p>
<p>Across the combined capital cities, there were 16,763 dwellings approved for construction in August 2016.  Capital city dwelling approvals were -4.3% lower over the month but 15.3% higher year-on-year.  Melbourne (+1.4%), Hobart (+58.2%) and Canberra (+9.6%) were the only capital cities with a higher number of dwelling approvals over the month. </p>
<p>Year-on-year the number of dwelling approvals were higher in Sydney (+45.8%), Melbourne (+21.3%) and Brisbane (+29.0%) but lower in Adelaide (-13.8%), Perth (-38.3%), Hobart (-4.4%), Darwin (-28.4%) and Canberra (-6.6%).</p>
<p><a href="/images/2016/10/04/Chart-4-580x209.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Chart-4-580x209.jpg" alt=""></p>
<p>In August 2016 there were 7,264 capital city houses approved for construction which was the highest number of approvals since July 2015.  Capital city house approvals increased by 10.2% over the month and were 4.7% higher year-on-year.  The number of houses approved for construction in August was higher across all capital cities. </p>
<p>Year-on-year house approvals were higher in Sydney (+4.3%), Melbourne (+18.0%), Brisbane (+15.1%), Hobart (+8.8%) and Canberra (+62.1%), were unchanged in Adelaide and were lower in Perth (-20.6%) and Darwin (-23.2%). </p>
<p>Perth and Darwin are seeing falling sales, rents and home values and it seems the development industry is responding by seeking fewer new house approvals.</p>
<p><a href="/images/2016/10/04/Chart-5-580x209.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Chart-5-580x209.jpg" alt=""></p>
<p>There were 9,499 units approved for construction across the combined capital cities in August 2016.  Although unit approvals were -13.1% lower over the months, they were 25.0% higher year-on-year. </p>
<p>Although unit approvals were lower over the month it was the 23rd consecutive month that house approvals were lower than unit approvals.  The number of capital city unit approvals were lower over the month across all cities except for Canberra which were 9.9% higher. </p>
<p>Looking at the year-on-year changes in approvals, they were lower in Adelaide (-39.2%), Perth (-67.1), Canberra (-18.5%) and Hobart and Darwin where there were no approvals in August 2016.  Unit approvals were higher year-on-year in Sydney (+71.1%), Melbourne (+24.3%) and Brisbane (+43.0%).  Interestingly the number of units approved for construction is trending higher again in Sydney and Melbourne (although they fell a little in August) while in most other capital cities they are falling.</p>
<p>We’ve been expecting the number of dwelling approvals to start trending lower for some time and to-date it just hasn’t occurred.  We anticipate that approvals will slow over the coming year however, they are likely to remain high on an historic basis. </p>
<p>With tighter lending policies, particularly for investors it is reasonable to expect that once the slowdown occurs, it is likely to impact on the unit market more so than the detached housing market which tends to be dominated by owner occupiers more than investors.</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 remain at very high levels: CoreLogic

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<p>Dwelling approvals outstripped expectations again in August, with a small 1.8 percent pull back coming well above the consensus expectation of a more material 6 percent decline and a slight upward revision to July's big jump.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.56.55%20PM.jpg">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.56.55%20PM.jpg" alt=""><br><br>The number of approvals in July was the second highest month on record. Even with a dip, the August reading is still the fourth highest month on record with approvals now up 10.1 percent/yr.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.00%20PM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.00%20PM.jpg" alt=""><br>Expectations for a pull back centred on high rise approvals. This segment saw a spectacular 39.8 percent jump in July that was expected to largely reverse in August. Approvals instead held up much better than expected with our estimates pointing to about a 10 percent drop in seasonally adjusted terms in the month. This still leaves high rise approvals 25 percent above their June level.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.06%20PM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.06%20PM.jpg" alt=""></p>
<p>The rest of the detail showed mixed moves. The small ‘low-mid rise’ segment saw a solid 7.8 percent gain in the month but the larger and more stable detached house approvals segment recorded a 1.3 percent dip. Combined, approvals ex high rise were up slightly, about 1.2 percent/mth but down 4.1 percent/yr. To the extent that this measure is more reflective of underlying conditions it is pointing to a modest trend decline running at about 1-1.5 percent a month.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.25%20PM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.25%20PM.jpg" alt=""><br>By state, approvals dipped 2.3 percent in NSW but were up slightly in Vic and Qld with big monthly declines coming in WA and SA. Notably, within the NSW estimates ‘unit’ approvals were still the second highest monthly level on record.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.37%20PM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.37%20PM.jpg" alt=""></p>
<p>The value of renovation approvals also softened in August, down 0.9%mth, but up slightly on a year ago (+1.2%). Both moves are fairly small for what is typically a much more volatile monthly series.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.43%20PM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.43%20PM.jpg" alt=""></p>
<p>The value of non residential building approvals recorded a large 24.3 percent fall in August to be down 12.9 percent/yr. Monthly reads have been extremely choppy over the last year but approvals appear to be tracking and underlying downtrend. Falls in public sector work, private accommodation, and private sector education, health and office approvals drove the August decline.</p>
<p><a href="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.49%20PM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/04/Screen%20Shot%202016-10-04%20at%204.57.49%20PM.jpg" alt=""></p>
<p><br>Overall, the continued high level of dwelling approvals points to a dwelling construction upturn holding up stronger for longer. Both tightening lending conditions and a surge in new apartment supply have had little or no impact to date but are expected to rein in 'high rise' approvals over the next year. But even allowing for a potentially sharp reversal lower in coming months, the pipeline of dwellings under construction is set to continue expanding strongly throughout the rest of 2016 and is likely to continue rising in the first half of 2017.</p>
<p><em><span>Matthew Hassan</span> is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.</em></p>
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High rise boom continues: Westpac's Matthew Hassan

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<p>A potential oversupply, and settlement risks around on off-the-plan apartment purchases has not deterred the number of dwellings approved for construction across Australia’s capital cities according to CoreLogic research.</p>
<p>A review by CoreLogic research analyst Cameron Kusher based on data to July 2016, shows there were 17,380 capital city dwelling approvals; the highest number of approvals since October 2015 and the third highest monthly number of capital city dwelling approvals on record. Mr Kusher said, “Despite a recent slowdown in capital city dwelling approvals there was a substantial rebound in July 2016.”</p>
<p>Looking at the split between houses and units over the month, there were 6,482 houses and 10,898 units approved for construction across the combined capital cities. There have now been more units approved for construction than houses across the combined capital cities for 22 consecutive months. Over the 12 months to July 2016, 57.9% of all capital city dwelling approvals were for units.</p>
<p>Over the past year, there have been 76,356 capital city houses and 104,835 capital city units approved for construction. In each of: Sydney, Melbourne, Brisbane and Canberra there have been more units than houses approved for construction over the past year.</p>
<p><a href="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.55.34%20AM.jpg" target="_blank">Click to enlarge</a></p>
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<p><img src="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.55.34%20AM.jpg" alt=""></p>
<p>Sydney - there were 54,667 dwelling approvals over the past year which is 7.3 percent higher than the previous year. This figure comprised of 16,360 house approvals (+3.2 percent yoy) and 38,307 unit approvals (+9.1 percent yoy).</p>
<p>Melbourne – over the year to July 2016 there were 57,428 dwellings 4,000 approvals which was -0.2 percent lower over the year. 25,880 of these approvals were for houses and 31,548 were units, with the year-on-year 3,000 changes recorded at +11.2 percent and -7.9 percent respectively.</p>
<p>Brisbane – The 30,901 dwelling approvals over the past year consisted of 11,210 houses and 19,691 units. Overall approvals are 4.0 percent higher over the year with house approvals -1.4 percent lower and unit approvals 7.4 percent higher.</p>
<p><a href="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.55.26%20AM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.55.26%20AM.jpg" alt=""></p>
<p>Adelaide – there were 6,119 houses and 3,899 units approved over the past year resulting in 10,018 total approvals. Over the past year, dwelling approvals are 10.9 percent higher with house approvals up 9.3 percent and unit approvals 13.5 percent higher.</p>
<p>Perth – the number of annual dwellings approvals fell by -24.3 percent over the year to 20,963. Over the year, the 14,202 house approvals were -26.7 percent fewer than the previous year and the 6,761 unit approvals were -18.6 percent less than a year ago.</p>
<p><a href="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.55.47%20AM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.55.47%20AM.jpg" alt=""></p>
<p>Hobart – there were only 989 new dwellings approved for construction over the year, 799 of which were houses and 190 units. House approvals were -22.7 percent lower year-on-year and unit approvals were down -10.8 percent.</p>
<p>Darwin – there were 1,304 dwelling approvals over the past year which was -12.7% lower year-on-year. Over the year, the 657 house approvals was -22.8 percent lower than the previous year and the 647 unit approvals were 0.6 percent higher than the previous year.</p>
<p>Canberra – there were 1,129 houses and 3,792 units approved for construction over the past 12 months. There were -8.1 percent fewer house approvals than over the previous year while unit approvals were 24.7 percent higher over the year.</p>
<p>While policy makers and analysts voice concerns about the level of housing construction currently underway, particularly for units, Mr Kusher said we’re seeing approvals in capital cities remain unquestionably strong. “It will be interesting to see just how many of these approvals immediately progress to commencement and ultimately through to a completion given tighter lending conditions imposed on both developers and purchasers for off-the-plan units.”</p>
<p>“The data also reiterates why purchasers of off-the-plan units in major capital city housing markets should be very selective with regard to the types of units they purchase.”</p>
<p>“Importantly, oversupply concerns are most visible across specific and well defined geographic areas and product types,” Mr Kusher said.</p>
<p><a href="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.56.01%20AM.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/22/Screen%20Shot%202016-09-22%20at%2010.56.01%20AM.jpg" alt=""></p>
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j.ballantyne1990-6AQqhLzZaK

Capital city dwelling approvals rebounding: CoreLogic

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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>
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<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><a href="/images/2016/08/02/8.3%20PROPERTY%20CONSTRUCTION%20CYCLE.jpg" target="_blank">Click to enlarge</a></div>
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<div><img src="/images/2016/08/02/8.3%20PROPERTY%20CONSTRUCTION%20CYCLE.jpg" alt=""></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>
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<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>
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<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>
<p><a href="/images/2016/08/02/A1.jpg" target="_blank">Click to enlarge</a></p>
<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>
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<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>
<p><a href="/images/2016/08/02/A2.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/08/02/A2.jpg" alt=""></div>
<div class="separator"> </div>
<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>
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<div><a href="/images/2016/08/02/A4.jpg" target="_blank">Click to enlarge</a></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>
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<div class="separator"><a href="/images/2016/08/02/A3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="/images/2016/08/02/A3.jpg" alt=""></div>
<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>
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<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>
</div>
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