According to the latest figures from the Australian Bureau of Statistics
, the number of apartment approvals have fallen by 20 per cent since June 2016, which is something we should be worried about if this approval rate continues to fall.
Urban Taskforce CEO, Chris Johnson states that “In June 2016, NSW approved 4,140 apartments or high density homes in trend terms but the November approvals have dropped twenty percent to 3,263.”
“The drop seems to carry on a trend over 5 months which is of concern if it continues.”
This is a worrying factor especially as Sydney already has a shortfall of 100,000 homes. The city requires between 6,000 and 10,000 new homes every year to house a growing population. Apartment approvals should therefore be going up and not down.
Even the number of detached housing approvals has fallen slightly over the same period.
But it’s not just New South Wales that is seeing a fall in apartment approvals. Other states of Australia are also seeing a slowdown. This is down to a number of factors:
- Cautious lending by banks for apartments for developers, investors and owner occupiers;
- Increase in land costs;
- An increase in foreign buyer fees in VIC, NSW and QLD;
- NSW non-resident approvals have dropped in dollar terms from $1,052,833,000 in August 2016 to $977,804,000 in November.
It is hoped that the proposed changes by the NSW Government to the Planning Act will help reverse this downward trend.
“The NSW Government needs to monitor the downward trend in approvals and to ensure the planning system supports more growth. The Urban Taskforce is concerned that the recently established Planning Panels are deferring rezoning applications until councils can complete their own planning documents in areas where the state government wants new development.”
According to population projections, NSW is expected to grow to 9.9 million people by 2036, an increase of 2.71 million from 2011. This is mainly down to the natural increase as well as overseas migration.
So what does a fall in apartment approvals mean?
If apartment approvals continue to fall, we can expect to see the following occur:
- Higher demand due to a housing undersupply;
- Property prices continue to rise;
- More competition in the market to go up against;
- Higher number of people per household as mature children staying at home longer;
- More buyers priced out of the property market.
The last time that NSW’s supply of housing met or exceeded demand was between 2002 and 2006 and this time period saw a slight fall in property prices. But since then, property prices in Sydney have almost doubled rising by 88 per cent.
Published on 25th of January 2017 by Marty Stanowich