According to National Australia Bank senior economist Spiros Papadopoulos the number of homes approved to be built has hit an all-time high, hugely boosted by the surge in apartments and townhouses.
Approvals for the construction of new homes rose by 7,5 per cent in November according to Papadopoulos. In fact the figure came in much higher than economists’ predicted. Economists expected a three per cent fall rather than the 7.5 per cent increase that actually occurred. There were a total of 18,245 approvals granted in that month. It was the highest monthly result recorded since the 1980s.
Approvals for private sector houses dropped by 0.3 per cent in the month while other dwellings rose by 16.7 per cent, that includes apartment blocks and townhouses.
Papadopoulos said the solid outcome indicated a strong pipeline of construction activity ahead however he did warn that this activity is mainly in the apartment sector.
Most of the apartment growth is taking place in Victoria, an area that already has an oversupply of apartments in many parts.
In an article on Morgans.com.au, Mr Papadopoulos was quoted as saying:
“The RBA has been quite open about its concerns around the Sydney and Melbourne market and we have seen some easing of the apartment growth in NSW but the Victorian market has re-accelerated,” Mr Papadopoulos said.
“With interest rates at these fairly low levels, you’d expect the prices to hold up fairly well in the short term but once we start to see interest rates go up, you’d be quite concerned about prices in a couple of years’ time, with that huge supply coming on stream in 12 to 18 months.
“It certainly keeps Victoria on the radar for the RBA.”
During the 12 months leading to November, building approvals were up 10.1 per cent, the Australian Bureau of Statistics said recently.
Economist Tom Kennedy from JP Morgan also expressed his opinion about the growth which he said was encouraging, particularly considering that there were some concerning indications signalling a loss of momentum in the housing sector towards the end of last year. Kennedy went on to state:
“We think the cash rate is going to remain around these levels for quite some time, so you’re getting attractive funding rates, which should be supportive for residential construction,” he said.
He doesn’t think the data is strong enough to change interest rate forecasts. He went on to explain:
“We don’t think this data is a game changer, most of the upside was in high residential approvals, so I wouldn’t be surprised if there will be some payback the following month,” Mr Kennedy said.
Regardless of the type of construction being undertaken, health and safety should always take priority over productivity.
On apartment construction sites, like any other construction site every worker needs to be aware of their rights and responsibilities under health and safety laws. This involves first ensuring all workers have completed general construction training in the form of the White Card.