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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Monday, 3 April 2017

Brisbane apartment approvals take a swan dive

Approvals bounce

A stronger than expected result for building approvals, with the seasonally adjusted result up by 8.3 per cent in the month of February to 18,995, driven by a 10.9 per cent increase in attached dwellings.

Despite this, approvals were still 4.9 per cent lower than a year ago, and the trend seems more likely to continue declining over time. 


Annual approvals declined a bit further to ~229,000, with annual attached dwelling approvals now down from ~123,000 at their heady peak to ~113,000. 


The composition of this boom shows how it has very much been driven by 'high rise' apartments, to an extent not previously seen in Australian cities. 


Despite the stronger monthly result, the figures do appear to be consistent with housing starts declining over the next few years.

Brisbane and Perth drop

Annual house approvals in Perth are now 39 per cent below their peak of December 2014 as prices have come off. 

Elsewhere approvals are also looking somewhat toppy in this sector. 


The strong monthly result was largely driven by a high number of attached approvals in Sydney (3,287) and Melbourne (2,558).

Fears of oversupply in Melbourne, however, have been countered by record population growth

Brisbane on the other hand is unsurprisingly seeing apartment approvals sink like a stone, with the figures for recent months suggesting that annual approvals will drop by at least another 50 per cent from here. 


Overall, it seems likely that multi-storey apartment blocks will find a 'new normal' that is higher than in the past. But for now, Queensland has yet to find that new normal. 


The wrap

Overall, a solid result, but admidst the recent hysteria - with every man, his dog, RBA, APRA, ASIC, and loads of others all calling for 'something to be done' - including everything from outlawing investor loans to the banning of real estate agents - the downturn in building approvals will doubtless be resumed forthwith. 

Somewhat self-defeating, of course, and with the inflation rate already consistently missing target on the downside since 2015 will only ensure that the next move in interest rates is down.