A potential oversupply, and risk around settlement for off-the-plan apartment purchases has not deterred the number of dwellings approved for construction across Australia’s capital cities according to CoreLogic research.
A review by CoreLogic based on data to July 2016, shows there were 17,380 capital city dwelling approvals; the highest number of approvals since October 2015 and the third highest monthly number of capital city dwelling approvals on record.
Despite a recent slowdown in capital city dwelling approvals there was a substantial rebound in July 2016.
Looking at the split between houses and units over the month, there were 6,482 houses and 10,898 units approved for construction across the combined capital cities.
There have now been more units approved for construction than houses across the combined capital cities for 22 consecutive months.
Over the 12 months to July 2016, 57.9% of capital city dwelling approvals were units.
Over the past year, there have been 76,356 capital city houses and 104,835 capital city units approved for construction.
In each of: Sydney, Melbourne, Brisbane and Canberra there have been more units than houses approved for construction over the past year.
Sydney – there were 54,667 dwelling approvals over the past year which is 7.3% higher than the previous year.
This figure comprised of 16,360 house approvals (+3.2% yoy) and 38,307 unit approvals (+9.1% yoy).
Melbourne – over the year to July 2016 there were 57,428 dwellings approvals which was -0.2% lower over the year.
25,880 of these approvals were for houses and 31,548 were units, with the year-on-year changes recorded at +11.2% and -7.9% respectively.
Brisbane – The 30,901 dwelling approvals over the past year consisted of 11,210 houses and 19,691 units.
Overall approvals are 4.0% higher over the year with house approvals -1.4% lower and unit approvals 7.4% higher.
Adelaide – there were 6,119 houses and 3,899 units approved over the past year resulting in 10,018 total approvals.
Over the past year, dwelling approvals are 10.9% higher with house approvals up 9.3% and unit approvals 13.5% higher.
Perth – the number of annual dwellings approvals fell by -24.3% over the year to 20,963.
Over the year, the 14,202 house approvals were 26.7% fewer than the previous year and the 6,761 unit approvals were 18.6% less than a year ago.
Hobart – there were only 989 new dwellings approved for construction over the year, 799 of which were houses and 190 units.
House approvals were -22.7% lower year-on-year and unit approvals were down -10.8%.
Darwin – there were 1,304 dwelling approvals over the past year which was -12.7% lower year-on-year.
Over the year, the 657 house approvals was -22.8% lower than the previous year and the 647 unit approvals were 0.6% higher than the previous year.
Canberra – there were 1,129 houses and 3,792 units approved for construction over the past 12 months.
There were -8.1% fewer house approvals than over the previous year while unit approvals were 24.7% higher over the year.
While policy makers and analysts voice concerns about the level of housing construction currently underway, particularly for units, we’re seeing approvals in capital cities remain unquestionably strong.
It will be interesting to see just how many of these approvals immediately progress to commencement and ultimately through to a completion given tighter lending conditions imposed on both developers and purchasers for off-the-plan units.
The data also reiterates why purchasers of off-the-plan units in major capital city housing markets should be very selective with regard to the types of units they purchase.
Importantly, oversupply concerns are most visible across specific and well defined geographic areas and product types.
Note: The CoreLogic Settlement Risk Report identifies the Melbourne inner city and Brisbane inner city as the two markets where the largest amount of unit supply is likely to be delivered over the next 24 months.