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Building approvals jumped in July, with apartments leading the upswing by an impressive 23 per cent gain on June.
However, Mr Harnisch says caution needs to be exercised when interpreting headlines that indicate a “surge” in building approval numbers.
“It does not mean that the industry is on the cusp of another boom because the approvals will not necessarily translate into actual building activity over the next 3-12 months,” he said.
“Nevertheless the 11.3 per cent seasonally adjusted increase does demonstrate a high level of confidence by the industry in meeting the unmet demand.”
Record-low rates continue to fuel strong demand from property investors, despite efforts by the RBA and APRA to cool the market. ABS housing finance figures for the month of June showed a 3.2 per cent increase in investor loan commitments following a 3.9 per cent surge in May.
Mr Harnisch says at this stage it is too early to tell whether the recent interest rate cut will unleash a further round of investor interest in the apartment market.
“The building approval surge in high rise apartments was most notable in the major eastern states, particularly in New South Wales,” he said.
“The number of approvals for stand-alone housing remained steady and is expected to do so for some time underpinned by the confidence generated by the recent cuts in interest rates.”