Dwelling approvals data released by the ABS today show that approvals in the month of August grew across all of Australia, accept in NSW.
After some improvement in approvals performance in NSW in the earlier part of this year, the lockdown has seen a reversal in this trend with approvals going backwards for the 4th month in a row. That said, they remain well above the number of approvals recorded this time last year.
In the face of rapidly increasing home prices, particularly in NSW, the Commonwealth has had to take the dramatic step of calling on APRA to apply the blunt instrument of restricting the flow of money to new home buyers.
The rising house prices have spiked to such an extent, that ensuring that loans can be serviced has become a key concern for the regulators. While there has been some recovery, there has been a dramatic slowdown in new housing approvals since mid-2018, particularly in the apartment sector. This heralds a lack of supply for some time to come. In this circumstance, the Treasurer and APRA really had little choice but to take action.
In the face of a housing supply crisis, it is disappointing to see NSW housing approvals going backwards. We can only hope that this is COVID related and there will be a strong reversal of this trend soon.
Millennials, under the age of 40, desperately need to see a consistent focus on growth in housing supply. Otherwise they will be forced out of our city if they want to own a home.
As APRA moves towards tightening the prudential restrictions, it is this cohort of millennials who will miss out. At best, these changes will make it harder for them to enter the home market.
While some in the NSW Planning System maintain a position of denial about their impact on the housing supply side, it is hard to ignore the growing number of national and international policy analysis now calling out the problem.
Please see overleaf 3 graphs which plot the seasonally adjusted data published by ABS for the 4 major States (NSW, Vic, Qld and WA).