Approvals slump continues
CBA economist Stephen Wu predicts that inflation by December could begin with a '3-handle', with some economists suggesting the most recent interest rate hike may have been too hasty.
Indeed, with the base effect he's probably spot on, and it looks as though inflation is actually declining faster than the Reserve Bank's latest forecasts.
Certainly the building industry is despising current conditions, with insolvencies at decade highs.
In that context, it wasn't a surprise to see annual dwelling approvals slumping to the lowest level in 124 months in October, at 166,000.
Louis Christopher estimates that with cancellation rates presently running so high dwelling completions might be only 150,000 or so next year, even before accounting for demolitions.
There have been some large projects approved in south-east Queensland such as the twin towers in Robina and a large development in Brisbane's Fortitude Valley, but project approvals in Sydney and Melbourne remain very low.
House approvals should begin to recover with demand next year, but are currently trending lower with a HomeBuilder hangover, though approvals in booming Perth are already rising again.
Overall, building approvals have increased a little of late, but are way to low at around 14,000, with few medium- and higher-density projects likely to stack up or pass feasibility in the current environment.
Overall, the mix of higher interest rates, trades, and materials costs mean that developer profits just aren't easy to come by at today's prices.
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