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Monday, 5 March 2018

Approvals remain elevated

Melbourne leads approvals

It's a massive week of news, so let's quickly summarise building approvals.

High demand for apartments in Melbourne continues, while Sydney unit approvals continue to retrace.

Note that Brisbane attached approvals have now levelled out, another indicator that the bottom of the market is now nearly in (the crowd is always a day late, and often years late - but we'll now see more townhouses & duplexes and fewer high-rise apartments being approved now). 

House approvals were also strong in Melbourne, while Perth's detached housing also appears to be very close to the bottom of the cycle, with reports of a strong lift in rental demand by REA Group. 

Piecing it together, in seasonally adjusted terms this was a very strong month for approvals at close to 20,000 dwellings, though in truth January is a quiet month and not too much should be read into one month of numbers.

The trend result suggests that the construction pipeline remains large for 2018, although I note that it has visibly declined for Brisbane apartments from a year or two ago. 

Construction pipeline still at large

There is now a rather better spread of dwelling types, with annual high-rise approvals having pared back to a somewhat more sustainable level. 

And in Hobart approvals are rising in response to rising prices, but the supply response is slower being located away from the mainland (and units take a long time to be delivered in any case).

And finally, the surge in non-residential approvals seems to have run its course for now, but there's enough in the pipeline to keep construction humming through 2018, while wages in the sector recorded solid gains in the business indicators figures for the December quarter. 

In summary, approvals appear to have steadied for now, at a fairly elevated level.