Apartment approvals rise

Kathryn O’Meara
February 04, 2005

The sharp increase in building approvals for high rise apartments and townhouses in December 2004 should not be interpreted as a turning point in this segment of the market, according to the Master Builders Australia.

According to the figures released from the Australian Bureau of Statistics, apartments and townhouses, rose by a massive 27%, 10.1% higher than last year.

The total number of dwelling units approved seasonally adjusted rose by 2.7% to 13,060 units but were 11.3% lower than last year.

“Building approvals for high rise apartments are traditionally highly volatile, therefore it is too early to tell whether the jump in December 2004 is a turning point in investors’ sentiment or whether this is simply land banking by developers in anticipation of a recovery sometime in the future; it is more likely to be the latter.” MBA Wilhelm Harnisch chief executive said.

HIA senior economist Harley Dale said that a moderate decline in building approvals for the December quarter overall was in line with expectations for a manageable correction to new housing activity.

“Clearly the urgency of potential home buyers has abated. Not to an extent, however, to generate a substantial drag on the industry. The current more relaxed attitude on the part of potential buyers is expected to translate into a market contraction of around 13% over this year and next.

“The underlying fundamentals that drive the demand for housing are very sound and a healthy underlying requirement should subsequently come back into its own,” Dale added.

Private sector house approvals fell by 5.6% to 8,217 dwelling units and were 19.8% lower than the same time last year.

On a state by state basis, seasonally adjusted approvals rose in New South Wales, up 0.8%, South Australia, up 3.4%, Queensland, up 6.1%, and Western Australia, up 8.8%. Approvals held steady in Tasmania while they were down by 10.7% in Victoria. In original terms, approvals increased by 28.1% in the Northern Territory and by 98.5% in the Australian Capital Territory.

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