New home approvals rose 11.3pc in July

Any signs of a slowdown in the apartment building boom have been pushed aside with new approvals figures.

Construction worker building timber frame in new home.

Any signs of a slowdown in the apartment building boom have been pushed to one side after the latest official numbers showed a sharp lift in approvals through July.

The Australian Bureau of Statistics revealed total dwelling approvals jumped 11.3 per cent in seasonally adjusted terms for the month, driven by a 23 per cent surge in approvals for dwellings excluding houses, which includes apartments and townhouses.

The rapid lift in apartment approvals contrasted with a 0.5 per cent dip in housing approvals.

The overall numbers comfortably surpassed expectations for a modest 1.1 per cent lift.

On an annual basis, building approvals are up 3.1 per cent, driven by a 15.7 per cent advance in approvals for dwelling excluding houses and partially offset by a 2.9 per cent retreat in new housing permits.

The data are notoriously volatile, but undoubtedly temper expectations apartment building is starting to tail off after a ramp-up in supply over the past couple of years that has raised doubts over a glut in some inner-city areas.

“Approvals came in much stronger than expected in July … putting paid to risks of a sharp high-rise driven fall,” Westpac senior economist Matthew Hassan said.

“Our estimates suggest total high rise approvals jumped 45 per cent in the month to the second highest monthly level on record.

“There were soft spots … (but) the jump clearly casts doubt on the extent of slowing in dwelling construction. The very large pipeline of projects, dominated by multi-unit projects, should see new dwelling construction ramp higher in coming months and remain elevated into 2017.”

Westpac expects approvals to slow in coming months, but significant construction activity will now be seen through until at least the second half of 2017.

Such a circumstance would further heighten concerns around apartment prices in inner-city suburbs.