According to the latest Building Approvals data from the Australian Bureau of Statistics (ABS), in seasonally adjusted terms, housing approvals fell by 32.8 per cent in the year to 30 November 2018, driven by a 53.9 per cent plunge in apartment approvals, with detached dwelling approvals dropping 6.4 per cent.
On a month-on-month basis, total dwelling approvals declined 9.1 per cent, also driven by a slump in apartment approvals, which fell 17.9 per cent, with detached housing approvals slipping 2.6 per cent.
Reflecting on the ABS figures, ANZ Research’s head of Australian economics David Plank said that he was “surprised” by the figures, claiming that the result would raise additional concern over the impact of the housing market slowdown on the broader economy.
“The weakness in the data will intensify concerns that a severe slowing in housing construction will hit the economy in 2019, even though the backlog of housing construction is high and the non-residential sector is robust,” Mr Plank said.
The economist added that there may be a “prospect of a downward revision” in the Reserve Bank of Australia’s (RBA) seemingly “positive” outlook.
The ABS figures coincide with the release of the latest ANZ/Property Council Survey, which has revealed that confidence in the Australian property industry has dropped to its lowest level since September 2013, down three points to 123 index points for the coming March quarter.
According to the CEO of the Property Council of Australia Ken Morrison, the fall in confidence has been driven by tighter credit conditions, with expectations regarding the availability of finance dropping to -27 index points.
Mr Morrison urged policy makers to consider the impact of the reduced availability of credit amid the impending release of the financial services royal commission’s final report and upcoming state and federal elections.
“One of the big engines of the Australian economy is slowing, hit by tightening access to finance, softening forward work schedules and a less optimistic view of the economy,” he said.
“It’s a message our political leaders need to heed, with the final report of the banking royal commission due in February, a state election in our most populous state and biggest property market (NSW) in March, and then a federal election in May.
“It’s crucial that our policy-makers take the longer-term view and support sensible policies that sustain and stimulate the growth of Australia’s biggest industry which supports 1.4 million jobs and delivers the places our growing population needs to live and work.”
The Property Council chief added: “The global economy headwinds are picking up, foreign investors have been turned away, credit availability has tightened, and our largest residential markets have softened rapidly.
“It’s not the time to be making changes to policies which undermine certainty, confidence or incentives to invest in Australian property
Further, the plunge in dwelling approvals reported by the ABS has also been reflected in the ANZ/Property Council survey, with residential construction expectations falling by six index points for the March quarter to a record-low of -7 index points.
Commenting on the survey results, ANZ’s avid Plank added: “The ANZ-Property Council Survey for the March quarter gives a softer reading on the health of Australia’s property sector.
“The outlook for the residential housing segment is particularly weak, which is not surprising given the weak results we are seeing across other housing indicators.”
The latest figures provided by property research firm CoreLogic have also revealed that national dwelling values have slumped by 4.8 per cent nationwide, driven by a 6.1 per cent drop across Australia’s capital cities, led by a 8.9 per cent fall in Sydney and a 7 per cent decline in Melbourne.