National house market trending down

THE number of new houses and flats approved for development plunged 20 per cent nationally in December — a fall far bigger than economists were expecting.

Analysts said the slump highlighted continuing volatility in the high-rise construction market, which dragged the broader approval rate down dramatically.

Official figures reveal the number of private-sector houses approved in December rose 1 per cent to 9904, and has risen for five of the past eight months.

But this was more than offset as approvals in the “other dwellings” category, which includes apartment blocks and townhouses, continued to show sharp volatility.

Permits for other dwellings fell 39.2 per cent in December after surging 30.6 per cent the previous month.

Over the year to December, approvals were down 5.5 per cent, the Australian Bureau of Statistics said yesterday.

The slump last month was most pronounced in Victoria, at 35.2 per cent, seasonally adjusted. NSW followed, with a fall of 19.1 per cent.

The only state where approvals rose was Queensland, up by 4.2 per cent.

Westpac senior economist Matthew Hassan said the state breakdown showed the earlier high-rise spike in Victoria was unwinding, and had been compounded by a sharp drop in high-rise approvals in NSW.

“Overall, the December data confirms both our assessment that the OctoberNovember surge was temporary ‘noise’ and that the underlying tone to approvals is weak,” Mr Hassan said.

Nationally, economists were expecting a 7.6 per cent fall in building approvals last month.

The fall came in the wake of the surprise 12.6 per cent spike in November approvals, led by apartment construction out of Victoria.

It contributed to the biggest monthly percentage gain that month since November 2016 — the apartment construction boom.

While record low interest rates and population growth have been the linchpin for housing demand, auction clearance rates and house prices have weakened in recent months.

National approvals have lifted for four of the past seven months, after regulators ushered in new rules in recent years to tighten investors’ access to home loans, impacting buyer demand.

The Australian dollar dipped slightly with the release of the housing approval figures yesterday and was buying US80.42 cents late yesterday, down from about US80.8. AAP