NSW housing approval trend is bad for housing supply and affordability

03 March 2017

The January 2017 NSW housing approval numbers from the Australian Bureau of Statistics (ABS) indicate a downward trend with a drop of 26.5% between July 2016 and January 2017, says the Urban Taskforce.

 

“The January 2017 ABS trend figures for NSW home approvals indicate 4,857 approvals which is down from a high of 6,611 in July 2016,” says Urban Taskforce CEO, Chris Johnson. “The difference of 1,754 approvals represents a 26.5% fall which is a big worry as the Berejiklian government has linked housing supply to housing affordability as a major priority.”

“There is no doubt the middle of 2016 was an exceptional high point in housing approvals in NSW and that the downward trend is returning to a more normal position. The worry, however, is that we are still not achieving the average annual number of homes required over 20 years for Sydney.”

“The biggest drop in approvals has been for higher density apartments which dropped by 1,521 approvals from a July 2016 high of 4,196 to a January 2017 figure of 2,675. Detached houses remained relatively constant over this period only dropping 10% from 2,415 (July 2016) to 2,182 (January 2017).”

“Over the same half year Victoria has performed more strongly with a slight increase in all home approvals from 5,684 (July 2016) to 5,862 (January 2017). This is partly because Victoria has a much larger number of detached homes that are not as affected by financial constraints as those for apartments.”

“New South Wales also suffered a drop in the value of non-residential approvals over the six month period. The August 2016 approvals were for a value of $1,092,171,000 while in January this had dropped by 27% to $793,420,000.”

“The slide in approvals in housing comes just at the time the Berejiklian government is aiming to ramp up supply to have an impact on housing affordability. With an average of around 37,000 new homes required for Sydney each year for 20 years, in boom times we should be over 40,000 a year but to-date the highest has been 33,000. The Urban Taskforce believes there are a large number of potential new homes caught up in the planning system and that the government should focus on fast tracking approvals of these projects.”

See below graph on NSW Home Approvals based on ABS figures:

Graph 03.03.17
Download PDF Version.