The Australian Financial Review
By Rebecca Thistleton and Jacob Greber
5th March, 2014
Building approvals for new homes and units spiked in January, showing the appetite for property is set to continue this year.
Some 17,514 dwellings were approved in January, the biggest jump since 2002 and one of the strongest monthly gains in records dating back to mid-1983.
The rise in new dwelling approvals coincides with fewer than expected homes on the market, SQM Research figures, released on Tuesday, show.
Home listings rose in February after the quieter holiday period.
However, the number of homes on the market has fallen 3.3 per cent compared with this time last year.
Strong competition for houses has encouraged price rises, which have flowed on to unit prices as more buyers consider a unit.
The trend was reflected in a rise in unit prices across the five major capitals in February, according to RP Data.
Peter Semetas and Chris Naughton bought a three-bedroom apartment off the plan in South Yarra, Melbourne, as it was more affordable than a house.
The 186-square-metre apartment in Little Projects’ ILK development appealed because it was close to the city and attracted state government stamp duty savings available for new properties.
“We wanted the same lifestyle as a house; we didn’t want to lose a garden but wanted to be closer to the city,” Mr Semetas said.
“You couldn’t replicate what we have in an apartment in a house for the same price around the same area,” he said.
Apartments in the complex range from $325,000 for a one-bedroom apartment to $2.6 million for a penthouse. The median house price in South Yarra is $1.14 million, and $550,000 for units.
The pair upgraded from a house in Sandhurst, about 37 kilometres from Melbourne’s CBD.
Mr Semetas said they planned to one day upgrade to a house again and keep the South Yarra apartment as an investment. Approvals for a new dwellings jumped 6.8 per cent from December to be almost 35 per cent higher than a year ago, according to the ABS.
Economists were counting on a gain of just 0.5 per cent.
Master Builders Australia chief economist Peter Jones said there was a need for governments to ensure the recovery in the new housing construction was not undermined by a rise in prices.
CBA analyst Gareth Aird said the construction boost would have the dual benefit of restraining house price inflation and assisting the baton pass from mining to non-mining-led growth.
The normal rise in stock that follows the January holidays was a moderate tick up, not the normal jump in houses for sale.
Stock levels show there are 16 per cent fewer homes available for Sydney home buyers.
Melbourne and Canberra stock levels are down more than 5 per cent on last year, whereas Brisbane and Perth recorded little change.
However, Darwin stock levels were up 16 per cent on February last year.
SQM Research managing director Louise Christopher said vendors were in no rush to sell, and existing stock was being absorbed faster than usual.