Residential building approvals jump in May

May-building-approvals-soared-to-the-thirdhighest-month-on-record_157_6016419_0_14102276_300When you’re considering buying a house or apartment, there are many things that can enter into your mind. Pricing is probably at the forefront, alongside the lifestyle and location you’d like to lead in your new home.

The Australian Bureau of Statistics (ABS) has some encouraging news for buyers, revealing that the number of building approvals hit a year-to-year high in May – which could moderate price pressures across the country.

High tide of approvals

There was a minimal 2.4 per cent jump during May in seasonally-adjusted terms, but this is a drop in the ocean compared to the skyrocketing approvals figures from the past year. The total number of dwellings approved over the 12 months to May has climbed 17.6 per cent, with a whopping 19,414 recorded.

This figure reflects just how strongly the residential construction sector is growing, and could indicate a swing in the direction of affordability.

The Property Council of Australia has put its weight behind this point, highlighting that the continued strength of the building sector is going a long way towards helping Australians buy a house. Executive Director for Residential Nick Proud pointed out that it’s critical these figures persist for the sake of home ownership, as well as the country’s economic wellbeing.

“The only meaningful way to take the pressure off prices is to increase new housing supply and today’s data shows Australia is continuing a significant run of residential approvals,” he said.

“Housing construction is one of the few bright spots in Australia’s economy, creating jobs and economic growth.”

Bursting the bubble myth

While the Property Council of Australia expects that it could take some five years before the construction sector puts a dent in the housing deficit, this data could a welcome reprieve to arguments about a housing bubble.

The Housing Industry Association highlighted that this was the third highest monthly total on record, and Master Builders Australia said robust residential building activity should persevere for some time yet, offsetting concerns around rapidly inflating prices in locations like Sydney.

“Growth in residential building can be expected to continue for some time to come, putting downward pressure on house prices which should allay fears of a housing bubble,” Chief Economist of Master Builders Australia Peter Jones said.

What’s more, New South Wales looks to have emerged from slow period, showing resilience in the face of supply pressures. The Property Council noted that there has been a 10 per cent increase in approvals across the state, with 57,088 properties approved over the 12 months to May. NSW Executive Director Glenn Byres said the state needs to maintain this level to ensure buyers can continue to enter the property market.

“NSW needs to keep driving supply if we’re going to tilt the balance of affordability back in favour of homebuyers,” he said.

With the building industry playing its part to temper prices, buyers may have plenty to look forward to.

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