Building approvals fade
Having been off the grid for a day or three, I'm just catching up with last week’s news a bit here.
Let’s take a rattle through the December building approvals figures, which confirmed that the construction boom for this cycle is now tottering unsteadily on its last legs.
The trend for detached housing approvals has been fading gently since March of last year, while the trend for attached dwellings is dropping considerably faster, down by some 27 per cent since May.
Accordingly, the annual total of approvals for attached dwellings is pulling well back from record highs, taking total annual approvals back down to 231,000 from more than 241,000 at the peak.
Present trends suggest that we’ll see these totals heading back down towards 200,000 or likely lower in due course.
The figures for detached housing at the national level have generally been steadier through this cycle, although the national figures do obscure contrasting fortunes between the capital cities.
In Greater Melbourne, where population growth has hit its highest ever level, annual approvals are 43 per cent higher than they were three years ago, for example.
On the other hand, approvals for detached housing have dropped by 37 per cent in Greater Perth in only the past two years as the market looks to right itself.
Greater Darwin appears to be following a very similar pattern to Perth, with rents and dwelling prices in decline, and building approvals following suit.
Elsewhere, approvals are generally holding up for this dwelling type.
Action in the building permits figures for multi-unit dwellings is another matter entirely.
Following a record boom in approvals we are now seeing approvals numbers falling away fast as developers recognise the looming oversupply risk, particularly in Brisbane.
Drilling into the sectoral figures, the big declines have been in approvals for dwellings of the tower block variety.
The drop had to happen sooner or later - and now it is, particularly in Queensland.
Speaking with developers this week, it's become clear that making off-the-plan sales to mainland Chinese developers has become a much tougher prospect over the past six months, as lenders and authorities crack down on the movement of capital.
The general developer's view in Brisbane now is that if a new residential project isn't underway by now, it ain't getting underway in this cycle.
Overall, building approvals are still tracking at reasonably solid levels.
However, it does appear that the residential construction cycle will contribute little to further growth in the economy after a stellar run.