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House building continues to weaken with most capitals reporting declines in activity over June with the exception of Brisbane where house building is booming.
Latest ABS data reports that the number of houses approved for building declined by 3.3 per cent over June to 6914. House approvals have fallen by 3.9 per cent or are 1488 fewer over the first half of this year compared to the same period last year.
All capitals have recorded declines in house building approvals over the six months to June compared to last year with the exception of Brisbane. Canberra and Darwin have reported the steepest declines down by 33.8 per cent and 39.0 per cent respectively.
Melbourne continues to approve the most houses of all the capitals with 12863 recorded this year so far which accounted for 35 per cent of the capital city total. Melbourne house approvals however have declined by 1.0 percent compared to the first six months of last year.
Brisbane has clearly bucked the weakening capital city trend with building approvals for houses increasing by 2.0 per cent or 112 higher this year so far compared to the same period last year.
1389 Brisbane houses were approved for building over June which was the highest monthly total recorded by the city since August 2007 and the fourth highest on record.
Strengthening house building approvals in Brisbane are a positive for the local economy and also help to support housing affordability through increased supply. Rising numbers of first home buyers may be a factor in increased demand for new houses and likely to continue with the Queensland First Home Owners Grant Boost for new homes now extended until the end of the year.
Declining house approvals in the other capitals however is unwelcome news with negative implications for economic growth and will generally put upward pressure on prices and rents – particularly in those capitals that are currently experiencing strong migration.
The Reserve Bank will also be concerned over the recent decline in planned home building and its impact on general economic activity with clear implications in an already subdued economy for a re-think on current interest rate settings.