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New home approvals hit a 15 month high based on strong growth in Victoria

Today’s Australian Bureau of Statistics data shows the total value of Victorian building approvals increased by 28.5 per cent to $4.6 billion in November 2017, and is up 67.2 per cent over the year, the highest level since August 2016. Victoria, Tasmania and WA are the three states showing the largest increases, with Victoria by far showing the strongest growth

HIA Senior Economist Shane Garrett explained the growth as being mostly driven by apartments.

“Growth was driven by multi-units which saw approvals expand by 28.7 per cent during the month. The number of new detached house approvals actually declined by 2.8 per cent in November but the number of approvals remains consistent with what we saw throughout 2017.

“Even though multi-unit approvals can vary hugely from month to month, the result for November is still remarkably robust given that building approval volumes have been trending down for some time.

“Newly-built dwellings are a vital component of the rental market – and properly functioning rental markets are crucial in accommodating employment growth and economic development. It is very important that taxation settings relating to investors continue to support the provision of adequate rental supply.”

During November 2017, the largest increase in new dwelling approvals occurred in Victoria (+37.9 per cent), followed by Tasmania (+10.6 per cent) and Western Australia (+3.9 per cent).

The largest reduction in home approvals affected the ACT (-21.8 per cent), followed by the Northern Territory (-3.2 per cent) and South Australia (-3.0 per cent). The volume of approvals was also down in Queensland (-2.4 per cent) and New South Wales (-2.3 per cent) during November.

“The geographic reach of November’s expansion was quite narrow with Melbourne’s booming market accounting for the lion’s share of the increase nationally. Victoria is easily the fastest growing state in terms of population – it is encouraging that new housing supply in the state is responding to the strongly growing demand. Statistics show a 67.2 per cent increase over the whole calendar year,” said Mr Garrett.

Victorian Treasurer Tim Pallas was understandably pleased with the result; attributing the strong growth to the Labor Government’s Homes for Victorian’s package which cut stamp duty for first home buyers and also boosted construction in regional areas.

“The strong growth in residential building approvals is good news for housing affordability and another sign that we have the policy settings right when it comes to housing in Victoria,” said Mr Pallas.

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Samantha McLean

Samantha McLean is the Managing Editor of Elite Agent Magazine.
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