Strong policy direction needed to alleviate property prices

The-right-policy-direction-is-necessary-to-alleviate-housing-prices-in-Sydney-says-the-HIA_157_65918_0_14099646_300Building approvals are solid across the country, according to new figures from the Australian Bureau of Statistics.

However, the ability to edge in on the Sydney real estate game may take some time yet. In the meantime, the conditions are ripe for existing property owners, who may look to upgrade their current dwellings and utilise the low cash rate to take out a mortgage refinance.

Strength in building approvals

“Although approvals fell by 5 per cent during February compared with January, the overall picture is one of strength in the sector,” explained Housing Industry Association Senior Economist Shane Garrett in an April 2 statement.

While the sector is demonstrating strength, it may be some time before potential buyers are able to purchase new dwellings.

Approvals take an average of six months to actually result in “activity on the ground”, noted Mr Garrett. This means that would-be first home buyers may not see an in until later in 2014.

Despite approvals increasing across the country, they actually dropped in New South Wales by 5.8 per cent.

That said, there are a number of development projects already underway across Sydney alone, spurred by a state government response to alleviate increasing home prices that are leaving some buyers in the dark.

Once these approvals translate into physical properties, this will help calm rising prices on existing stock, explained Mr Garrett.

“Strong residential building activity is a good thing for affordability,” Mr Garret stated.

Areas for growth

Growth in approval figures has largely been driven by demand for detached houses rather than multi-units, noted the HIA.

Multi-unit approvals dipped by 6.9 per cent in the three months to February, while detached house approvals grew by a comfortable 7.3 per cent.

Mr Garrett emphasised the importance of housing policy that continues to favour stronger housing activity, with a nod to the continued low cash rate.

It could be some time before Sydney prices ease, making current property ownership welcome for landlords looking to find tenants.

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