Investor regulatory interventions causing apartment downturn

The situation is likely to worsen, too, with a record high of 33,800 dwelling projects approved for the year so far.

“There were still over 150,000 multi-unit dwellings under construction at the end of 2017, which is only slightly below the 155,000 level at the peak of the cycle. There are a further 33,800 dwellings in projects that have been approved and are yet to start work. This is a record high,” Mr Murray said.

“The combination of falling commencements and the build-up of dwellings in projects awaiting commencement is somewhat concerning. It is likely to indicate a slowdown in pre-sales activity.”

What is holding back more multi-unit dwellings is a lack of pre-sales, which Mr Murray said needs to be turned around for the economy.

“With additional taxes on foreign investors and regulators clamping down on investor lending, investors have retreated from the market,” the senior economist said.

“If we see investors return to the market and the approved projects continue to progress through to work on the ground, then residential building work could potentially make a stronger contribution to economic growth this year than we are expecting.

“Now is not the time to impose additional taxes or constraints on investors.”

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