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Last year was a mixed bag for real estate, ending the year stronger, and the residential building sector experienced similar challenges.
The latest figures from the Australian Bureau of Statistics revealed overall building approvals in 2019 were down by 18.5 per cent on 2018.
However, they made a recovery at the end of last year, with stronger building approval figures coming out of each state and territory.
“The start of 2019 was tough for the residential building industry with the credit squeeze, falling house prices and uncertainty surrounding the federal election putting a dampener on confidence,” Housing Industry Association economist Angela Lillicrap said.
“The market did improve in the final months of 2019, suggesting that the building industry will not continue to constrain economic growth in 2020. New home building has stabilised at relatively strong levels.”
Ms Lillicrap noted that detached house approvals recovered at the end of the year, bringing the number of new builds in line with the number of 2018 projects.
“Multi-unit approvals have been leading the declines and are 25.0 per cent lower than they were in 2018,” she said.
“Continued growth in house prices will assist in bringing investors back to the market as well as support an increase in activity across the broader economy. We are unlikely to see the same boom of investors as experienced in the previous cycle due to restrictions on foreign investors.”
Access to credit will continue to be the most significant impediment on the future growth in building approvals, Ms Lillicrap said.
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