High-rise apartment building projects in Victoria primarily drove the increase in building consents nationwide in November 2017, according to the Australian Bureau of Statistics (ABS).
Construction permits rose 11.7 per cent to 21,055 permits in seasonally adjusted terms from October. Economists had anticipated a 1-per cent drop in building approvals, but the unexpected growth indicated that building boom in apartments has not yet lost its steam.
The higher building permits bode well for suppliers of a boom lift for sale and other aerial access platform equipment. Apartment developers in Victoria evidently needed one or two of them, as permits increased 5.6 per cent in the state. The growth countered a decline in other regions, particularly an almost 22-per cent decline in the capital.
Building consents in New South Wales and Queensland also dropped in November from October last year. Still, the spike in Victoria’s apartment construction masked regional declines while contributing to a 17.1 per cent increase in total approvals in November year over year. Justin Lokhorst, ABS director of construction statistics, said that this also provided a domino effect on dwelling permits.
The rebound in high-rise building consents caused an uptick in dwelling approvals in recent months, according to Lokhorst. In November, private housing permits reached 10,000 homes. The question remains whether or not these permits will materialise into actual construction starts.
This uncertainty stems from weaker demand from homebuyers, which then led to lower home prices in capital cities such as Melbourne and Sydney. The slower demand occurred as the Australian Prudential Regulation Authority imposed tighter lending standards to investors.
Population growth in Australia will still underpin the demand for residential properties. Even if prices levelled off in recent months, an increase in building approvals suggest that developers are quite confident in the residential construction sector’s prospects this year.