New dwelling starts could worsen affordability crisis
According to data analysed by the Housing Industry Association (HIA), APRA restrictions are leading to a building slowdown, which could result in affordability getting worse.
Shane Garrett, HIA senior economist, said new dwelling starts were 8 per cent lower than this time last year, volumes of loans for new dwellings fell by 1.2 per cent over August, and the decline of new dwelling construction was led by the apartment side of the market.
Further, the number of owner-occupiers fell by 1.2 percent during August 2017, and the number of loans for new dwelling pushes fell by 2.4 per cent, yet the number of dwellings rose by 1.5 per cent during August.
“Apartment building has been impacted by a number of foreign investor penalties that have spread across the states,” Mr Garrett said.
“[The] housing finance data show that APRA restrictions on domestic investors are starting to bite – housing investor lending was down 0.4 per cent over the three months to August 2017.
“Our worry is that rental markets could end up being starved of the supply they need, resulting in accommodation shortages locally.”
Despite the slowdown, Mr Garrett said activity in the sector is high, and governments should be cautious in placing further constraints.
Over the June quarter, the seasonally adjusted changes in new dwelling starts were:
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