RECENT ABS BUILDING APPROVALS DATA PROVIDED SOME INTERESTING INSIGHTS INTO THE RESIDENTIAL MARKET IN WESTERN AUSTRALIA WHICH HAS SEEN PRIVATE SECTOR HOUSING RISING (IN TREND TERMS) FOR THE LAST 24 MONTHS.
It has certainly been a big couple of years for the industry which saw the largest number of developer lots sold since UDIA started keeping records. The last of the 2013 land sales are showing through in the July building approvals data and we should start to see a tapering towards the end of the year.
We saw the gradual build up of demand for lots during 2012 and developers sought to be prepared but the sheer volume of sales meant that throughout 2013 the UDIA data was showing a significant undersupply. The elasticity in supply was delivered through increasing the time between sale and settlement of a lot, which in some places stretched out to nine months. This meant that developers could to keep the flow of lots onto the market to meet demand and avoid the disastrous consequences of land supply shortages which were experienced last decade.
The heat was not just in the new market, the existing market also saw increased activity with the number of properties available for sale falling 28 per cent in the twelve months to June 2013 and the number of days on the market falling 32 percent. The June 2014 figures show that listings, although up on 2013, are still eleven percent lower than June 2012 and a massive 38 percent lower than June 2011 when the market was bleak.
The ABS building approvals data show just how strong the market has been with private sector housing approvals the second highest on record, just 4.9% less than the all time high in May 2006. Private sector non-housing (apartments, units etc) were also very high but the volatility of that sector means that you need to have a look over a longer period of time. In the twelve months to July there were 6950 approvals, 24 percent higher than the previous twelve months.
Our land sales data for the June quarter shows a slowing to more normal sales levels, although they are still 131 per cent a above the rolling ten year average, down from the peak of 166 per cent above the rolling average in March 2013. The outlook for the next twelve months is for a steady market with supply and demand in reasonable balance.