Dwelling Approvals At Their Highest Since April 2012
The housing market has shown fine momentum and the market confidence amply reflects in the upward curve of the construction sector. Tim Lawless for the Property Update talks about the hike in dwelling construction and partly attributes it to the low mortgage rates. Development activity has picked up all across Australia and unlike the resource sector; investment in housing sector should keep posting good numbers in times to come.
Dwelling approvals have never been as good since May 2012. Already, they are more than 10% higher for detached homes and nearly 3.2% higher for units.
Rampant construction activity
This, according to Lawless, should provide a shot in the arm to the economy as rampant activity in the construction sector would mean more employment and more demand for raw materials, furnishings, and appliances.
Builders high on confidence
The growth in itself has got a lot to do with the new-found confidence of the builder class. Today, they are keener on releasing new supply for they know there is a certain case of demand hike. A statistic which talks about 22% higher transaction numbers since last July provides ample backing to their confidence.
New look “Government Grants”
Government grants are now inclined towards benefiting new home seekers. Add to this the surge in population and you get the perfect recipe for greater construction activity in Australia.
New South Wales’s recent performance is along the expected lines and it is leading dwelling approvals in private sectors (contributed 28% of national private sector dwelling approvals in July 2012).
You can read the original article here.
Lawless, in his typical style, evaluates the housing data for us and I, for one, believe that he is on the mark with most of his interpretations. To me, New South Wales’s performance comes as no surprise. After all, Sydney has also outperformed Melbourne by something like 3% for “growth in housing value for capital cities” ( A first for Sydney).
Caution needed against oversupply
Performance of the construction sector is especially heartening since they give an impression of having woken up from a prolonged slumber. Having said this, I have my reservations against the pace of their growth. After all, there are past examples where sudden pick up in the construction sector has resulted in oversupply and subsequent fall in demand.
Do you think that the move to restrict government grants to new homes is correct?