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GovernmentStaff WriterSat 14 Oct 17

Building Slowdown Could Threaten Affordability

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The latest figures from the Australian Bureau of Statistics coupled with the most recent building activity data pointed to a cooling down of housing starts and investor lending.

HIA senior economist Shane Garrett said the reports indicated a situation less bright that people think.

“Contrary to reports in today’s media, constraints on lending to investors are compounding a slowdown in building activity and could lead to worsening affordability," he said.

“New dwellings starts are now 8.0 per cent lower than this time last year.

“This slowdown is further highlighted in finance data which show that the volume of loans for new dwellings fell by 1.2 per cent in August.

“Construction of new dwellings has been in decline for more than a year and it is the apartment side of the market that is leading the downturn," he said.

Housing Finance data indicate that the number of owner-occupier for new housing fell by 1.2 per cent during August 2017. This was driven by a 2.4 per cent reduction in loans for the construction of new dwellings. The number of loans for the purchase of new dwellings by owner occupiers actually rose by 1.5 per cent during August 2017.

Garrett said the housing finance data showed that APRA restrictions on domestic investors are starting to bite.

"Housing investor lending was down 0.4 per cent over the three months to August 2017.

“Apartment building has been impacted by a number of foreign investor penalties that have spread across the states.

Garrett said it was a concern that rental markets could be starved of the supply they need, resulting in accommodation shortages locally: “Activity in the sector remains high despite the slowdown," he said.

Garrett said governments should be cautious in considering further constraints on the sector.

ResidentialAustraliaConstructionFinanceReal EstateConstructionSector
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"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
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Article originally posted at: https://www.theurbandeveloper.com/articles/building-slowdown-threaten-affordability