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Thursday, 5 April 2018

Building approvals swing to commercial

Approvals shift

Apartment approvals are now declining quite quickly in Sydney, while confidence is picking up off the mat in Brisbane, especially for tonwhouses and semi-detached dwellings.

The latest ABS figures relate to the month of February, but with more and more new apartments failing to value up at completion it's only a matter of time before unit approvals in Sydney decline further. 


Approvals for houses are generally mirroring internal migration trends, with Brisbane and Melbourne attracting the most migrants from elsewhere in Australia, but Perth having experienced an outflow of residents. 


Totting it all up, there is little evidence yet of a bust in residential construction, with more than 221,000 dwellings approved over the year to February 2018, although we are now well off the peaks.


The high-rise apartment sector has also calmed down a bit now, with a notable shift towards more approvals for family appropriate dwellings, such as terraces, semi-detached homes, townhomes, and low-rise apartments. 


Commercial boom

Another point of note is that the annual value of non-residential building approvals have boomed to their highest ever level at just shy of $48 billion, keeping building activity sustained at a high level in 2018. 


There has been record activity across approvals for warehouses, offices, schools, universities, and aged care facilities. 

This is a positive signal, for there will be a significant hole to plug as Sydney apartment construction fades.