The latest Australian Bureau of Statistics figures show a drop in non-residential and residential building approvals over the last 6 months in NSW, says the Urban Taskforce.
“In a worrying sign that the property market is slowing down the latest ABS approval numbers continue a fall from June 2015,” says Urban Taskforce CEO, Chris Johnson. “While the state’s performance is well above the 10 year average the continual slow down means the government must be careful with any changes that affect the industry. We are concerned that statements about value capture levies along with a less focussed local government sector due to amalgamations could lead to further drops in production.”
“In the high density apartment market the approvals in December 2015 dropped to 3,060 from a high in June 2015 of 3,338 approvals on trend numbers. This could be a settling down to more normal production or it could be signs of less confidence in the market through a tightening of bank loans.”
“Even at the June high point NSW was not producing sufficient housing for the increased population particularly when many approvals do not proceed to housing production.”
“The non-residential building approvals which are measured by value have also slowed down over the last 6 months with NSW now being behind Victoria and Queensland despite these states being smaller than NSW. Victoria approvals for non-residential buildings was $833,198,000 in December 2015 compared to Queensland at $692,603,000 and NSW at $691,569,000.”
“While the NSW economy is generally in good shape the role of building production needs to be carefully supported to ensure it remains robust. There has been significant state government reports referring to the concept of ‘value capture’ which if overplayed could make some projects unfeasible. We are also concerned that many councils are now in a transition phase towards amalgamation with restrictions on negotiations with the development industry which could slow down the approval process.”
“The Greater Sydney Commission may need to take a strong role with approvals of major projects during the transition process to ensure housing supply continues at a strong level.”
See below graph based on ABS figures below: