Welcome Guest [Log In] [Register]


Reply
RP Data Blog -- New South Wales the driving force behind surge in dwelling approvals!!; RP Data Blog -- Strong housing market fuels dwelling construction
Topic Started: 4 Oct 2013, 01:15 PM (662 Views)
Sherlock
Member Avatar


Link -- http://blog.rpdata.com/2013/10/strong-housing-market-fuels-dwelling-construction/

Quote:
 
Strong housing market fuels dwelling construction

By Tim Lawless on October 3, 2013 in Consumer confidence, Housing finance, Housing supply, Research

The Reserve Bank’s monetary policy settings are working. Dwelling values are rising, as should be expected when mortgage rates are at historic lows. But arguably what is more important is that the renewed level of housing market confidence is showing up in improved development activity and demand for new homes. This is exactly what the doctor ordered – a ramp up in the construction sector is one of the essential elements of our new look economy where resources related investment will be lower but housing investment is expected to be higher.

Dwelling approvals have been trending higher since about April 2012 which is close to the same time that the housing market bottomed out from a value depreciation perspective. Between April last year and August this year the number of dwelling approvals (seasonally adjusted) from the private sector has increased by close to 30% and over the past twelve months dwelling approvals are 10.3% higher for detached homes and 3.2% higher for multi-unit dwellings.

National private sector dwelling approvals

The lift in development activity has a significant multiplier effect on the economy. For a start, more homes being built means more hours worked in the construction sector and more jobs. Demand for building materials rises as well as home furnishings, bulky goods, appliances and white goods.

The improvement in dwelling approvals is likely to be driven by a number of factors. The overall market growth cycle will have a lot to do with it; developers and builders are more inclined to release new supply when consumer demand for housing is higher (transaction numbers were about 22% higher than a year ago based on our estimates for July). Another factor would be government grants and stamp duty concession which are firmly aimed at providing incentives to purchase new homes rather than established ones. And finally there is also the strong rate of population growth which is fuelling organic demand for new housing (Australia’s population grew by 1.8% over the year to March 2013 which equates to just under 400,000 new residents).

The surging demand for new homes shows up clearly in the ABS housing finance commitments data. The graph below plots the number of new mortgage commitments by owner occupiers for newly built homes. Finance demand for new housing hasn’t been this high since 1979 and the number of commitments in July this year were 52% higher than a year ago.

Number of housing fin commitments for new homes (oo only)

Dwelling approvals from state to state are a bit of a mixed bag though. The New South Wales region is the driving force behind the surge in dwelling approvals with the latest August data showing a 48% lift in private sector approvals compared August 2012. In July, New South Wales accounted for 28% of all private sector dwelling approvals nationally.

Posted ImageNSW private sector dwelling approvals

Dwelling approvals have eased in Victoria after a surge of development approval activity in 2009/10. In fact, at their height, Victorian dwelling approvals accounted for 40% of all approvals nationally. Based on the July 2013 data, Victoria now comprises a much healthier 27% of all dwelling approvals nationally and the lower rate of dwelling approvals together with Victoria’s very high rate of population growth should help to bring reduce fears of local oversupply.

VIC private sector dwelling approvals

With Queensland’s housing market remaining fairly depressed (Brisbane values have only moved 1.1% higher over the past twelve months), developer confidence is yet to pick up. Private sector dwelling approvals have increased by 10% over the past year but remain well below the long term average. Despite the low number of approvals, population growth into Queensland remains rapid, with the state population growing by 92,300 residents over the year to March – roughly the same raw figures as New South Wales but with about a third less new housing supply coming on line.

Qld private sector dwelling approvals

South Australia’s housing market has remained one of the weakest across the capital cities, with dwelling values 0.8% lower over the past twelve months. With such sedate housing market conditions it is surprising to see dwelling approvals rise by 30% over the past twelve months. 76% of South Australian dwelling approvals are for detached homes, highlighting the fact that the local unit market in Adelaide remains a very small proportion of the dwelling mix despite the state government offering attractive incentives to purchase new inner city units.

SA private sector dwelling approvals

Dwelling approvals in Western Australia have increased by 18% over the past twelve months in line with very robust housing market conditions. The rate of capital gain across Perth has recently been slowing, as has rental growth and buyer numbers appear to have peaked as well, so it may be the case that developer activity starts to mellow across WA as well.

WA private sector dwelling approvals

One final point on the new level of dwelling approvals is the trend towards more medium and high density product. The graph below shows the number of dwelling approvals for detached homes nationally as a proportion of all dwelling approvals. Houses now comprise around 60% of all dwelling approvals, a big shift from ten years ago where they accounted for closer to 70% of all dwelling approvals.

The trend towards unit development is likely being driven by changing market preferences (more empty nesters and single person households), affordability constraints (units tend to be cheaper) and changed zoning rules (more land is zoned for medium and high density development particularly in areas closer to the city centre).
Profile "REPLY WITH QUOTE" Go to top
 
Admin
Member Avatar
Administrator

Quote:
 
The construction industry is performing at its best since 2010, new results show

Monday, 07 October 2013 10:58
Patrick Stafford

The construction industry has received a much-needed boost, with the latest results of a new survey showing the market is at its best point in over three years.

The update comes at a good time. Construction businesses make up a huge part of the number of business insolvencies every month – owners are forcing margins down even further in order to survive.

The latest Australian Industry Group-Housing Industry Association Performance of Construction Index rose 3.9 points to 47.6 in September.

Although this number is still below the 50-point level separating expansion from contraction, it’s the highest reading since May 2010 – and that’s mostly due to apartment building.

The apartment building index increased 20 points to 57.7 after a shocking 40 consecutive months of decline. The AIG said businesses are now beginning to see more work, and enquiries are on the rise as well.

Harley Dale, chief economist of the Housing Industry Association, told SmartCompany this morning he believes the result is a reflection of a “post-election lift in confidence”.

“This is a result for September, in that month we saw the NAB business confidence index rise, we saw a sharp lift in the Westpac-based survey of construction – it would appear there’s a bit more confidence in the air,” he says.

“This would have been helped by low interest rates.”

But Dale says it’s important to not let the situation get out of hand – the industry is still in trouble and it’s going to be a while before any major changes are seen.

“It’s all about whether that confidence translates into action,” he says.

The industry still suffers from insolvencies. Last week, one of the most successful construction businesses in the country, behind a $100 million refurbishment of David Jones stores in Melbourne, collapsed into administration.

Read more: http://www.smartcompany.com.au/construction-and-engineering/057865-the-construction-industry-is-performing-at-its-best-since-2010-new-results-show.html
Follow OzPropertyForum on Twitter | Like APF on Facebook | Circle APF on Google+
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Create a free forum in seconds.
« Previous Topic · Australian Property Forum · Next Topic »
Reply



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy