Unit approvals soar undeterred

Despite repeated warnings around apartment oversupply and settlement risk, the number of dwellings being approved for construction across the capital cities remains unquestionably strong, according to Core Logic RP Data.
In July 2016, there were 17,380 capital city dwelling approvals which was the highest number of approvals since October 2015. It was also the third highest monthly number of capital city dwelling approvals on record. Despite a recent slowdown in capital city dwelling approvals, there was a substantial rebound in July 2016.
Core Logic data analyst Cameron Kusher said looking at the split between houses and units over the month, there were 6482 houses and 10,898 units approved for construction across the combined capital cities.
“There have now been more units approved for construction than houses across the combined capital cities for 22 consecutive months. Over the 12 months to July 2016, 57.9 per cent of all capital city dwelling approvals were for units,” he said.
According to the data, over the past year, there have been 76,356 capital city houses and 104,835 capital city units approved for construction. In each of: Sydney, Melbourne, Brisbane and Canberra there have been more units than houses approved for construction over the past year.
Sydney – there were 54,667 dwelling approvals over the past year which is 7.3 per cent higher than the previous year. This figure comprised 16,360 house approvals (+3.2 per cent yoy) and 38,307 unit approvals (+9.1 per cent yoy).
Melbourne – over the year to July 2016 there were 57,428 dwellings approvals which was -0.2 per cent lower over the year. A total of 25,880 of these approvals were for houses and 31,548 were units, with the year-on-year changes recorded at +11.2 per cent and
-7.9 per cent respectively.
Brisbane – The 30,901 dwelling approvals over the past year consisted of 11,210 houses and 19,691 units. Overall approvals are 4.0 per cent higher over the year with house approvals -1.4 per cent lower and unit approvals 7.4 per cent higher.
Mr Kusher said despite policy makers and analysts (including CoreLogic) voicing concerns about the level of housing construction currently underway, particularly for units, approvals in capital cities generally remained unquestionably strong.
“From here, it will be interesting to see how many of these approvals immediately progress to commencement and ultimately through to a completion,” he said.
“Tighter lending conditions for both developers and purchasers for off-the-plan units is likely to result in a larger proportion of approvals that don’t proceed through to a finished product. The data also reiterates why purchasers of off-the-plan units in major capital city housing markets should be very selective with regard to the types of units they purchase.
“Importantly, oversupply concerns are most visible across specific and well defined geographic areas and product types. CoreLogic’s Settlement Risk Report identifies the Melbourne inner city and Brisbane inner city as the two markets where the largest amount of unit supply is likely to be delivered over the next 24 months.”