Australia’s residential property industry could be facing a slowdown with declines noticed in both new housing commencements as well as values.
Tightening lending standards by banks to property investors could be the trigger for the latest downturn in the housing segment. New house construction has fallen 7.6 percent from the September 2018 quarter and the fall has been sharper in the apartment segment.
Dwelling values have taken a deep dive in Melbourne and Sydney.
Though construction work is in full swing on projects that were financed a couple of years ago, developers are unable to start new projects due to credit restrictions on property investors. This can be observed from the recent fall in building approvals.
The federal treasury’s Angelia Grant has attributed the housing price falls to supply and demand factors; supply has increased with earlier developments being completed but banks have simultaneously increased credit restrictions on investors.
According to numbers published by the Australian Bureau of Statistics, total new housing commencements have dropped 16.3 percent to 46,705 in the September 2018 quarter.
Additionally, new detached house construction fell 7.6 percent to 27,103 in the December quarter while commencements of attached dwellings declined by 26.8 percent.
In the non-residential construction segment, ABS research shows a 9 percent increase from the September quarter – infrastructure projects are also helping increase the scope of engineering work.