Illawarra Business Chamber Executive Director, Chris Lamont, said while the total value of new building approvals has been strong against previous years, a reduction in the number of building approvals will put further pressure on housing affordability and points to a potential slowing in residential construction activity.
There have been 535 less building approvals in the period April 2016 to March 2017 than for the same period in the previous 12 months. The Chamber is confident construction activity will remain strong over the next 18 months due to the number and value of previous approvals. There is a need to keep a very close on eye on building approvals, particularly in respect to residential construction.
There is also a need to increase the supply of affordable and greenfield housing to accommodate current and future demand, particularly for key workers. The linkage between affordable housing and investment in transport, economic development and job creation is critical to the Illawarra region.
“It is possible that recent movements in interest rates and tightening around home lending are impacting approvals. The market is also reassessing demand against the substantial injection of supply over the last two years.
“The decline in building approvals over recent months raises concerns for housing affordability in the Illawarra, given the average one to two year lag between building approvals and building completion,” said Chris Lamont.
The total number of building approvals for each area within the Illawarra as compared to the 12 months is set out below:
Source: Latest ABS Building Approvals Australia data (March 2017) available at: http://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0