Australia’s housing market divides on state of origin lines

Australia’s housing market divides on state of origin lines

Australia’s housing market continues to shift across states, like the State of Origin title, with more than a few surprises cropping up in recent times. One of the most interesting is the speed with which approvals in Victoria have grown, and the pace with which those in New South Wales have slipped away. Meantime, we need to start with total approvals because, perhaps remarkably, they are continuing to grow. For the year-ended April 2018, there were 226,623 separate dwelling approvals, up 2.1% on a year earlier, as the chart below shows.

fig4

To go straight to the dashboard and take a closer look at the data, click here.

The chart also shows the role that free-standing houses play in delivering this result. It may be barely discernible, but approvals rose 4.7% over the year, tot total 115,645.

So, in a well-worn story, dwelling approvals are continuing to rise, but they are doing so because of free-standing houses , and as we know, mainly at the expense of multi-residential dwellings, especially 4+ Storey Apartments.

But this month, for a change of pace, we focus our attention on the differences between approvals in each of the main states. The chart below displays the state by state approval details for all housing formats.

fig5

To go straight to the dashboard and take a closer look at the data, click here.

The chart shows that over the year-ended April, dwelling approvals in Victoria grew a solid 11.7% to 74,316 approvals, while those in the most populous state – New South wales – declined 3.8% to 70,838.

In part, this is a population growth and economic prospects thing, and so inevitably, across the country, it’s a patchy story. Approvals in New South Wales are down 3.8% compared with the year-ended April 2017, and in Queensland its 1.6% and Western Australia, 7.0%. Meantime, joining Victoria, approvals in South Australia were up 10.2%.

Housing is very complex, in part because pretty much every household is focused on how it gains and maintains private home ownership. Housing is at the core of our economy, and so, everything in the economy impacts on it, and is impacted by it.

The big driver – always has been, always will be – is population. No surprises then that Victoria has the fastest growing population in Australia. Interest rates matter of course, but tend to be more economy wide, than focused on a single state or region. Employment, and future employment prospects, are fundamental to housing approvals – so the Submarine building program has something to do with South Australia’s revival, we suspect.

A final factor to consider, for today anyway, is land release programs. State governments and local councils release land on a sophisticated and planned basis, signaled many years in advance. If you haven’t done so, it is worth checking out your State’s planning authority website, or in regional areas, your local Shire’s website.

So how does that explain Victoria’s rise relative to pretty much every other state? 

Victoria’s population is growing with net migration (from other states, as well as overseas) on the rise. Land has been released (and rezoned where needed, in key corridors) progressively over close to a decade, with a pipeline of developments continuing to come on line. It is the employment prospects question that confounds in Victoria. Along with South Australia, it is often considered Australia’s manufacturing ‘rust belt’.

There are solid drivers of employment in Victoria. A large infrastructure spend that will span a decade and link the city are part of that, as are post-industrial jobs in the food sector covering everything from growing technologies to packaging and the materials (including plastics and paper and cardboard) that are needed to ship the region’s food to other regions and around the world.

All of that – and more – is feeding into a housing market that is growing strongly right now and has prospects of continuing for at least a while yet.

When we examine housing markets, increasingly we have to look at Australia at a state and even regional level, and especially, at the broader economy – that’s where we will find the clues to guide us in our day-to-day business.

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