Canberra's housing stock continues to grow. Photo: Erin Jonasson Canberra home building continues to decline which is likely to add to the recent significant upward pressure on local prices and rents.
Latest ABS data reports that 185 houses were approved over the March quarter which was a decline of 8.4 per cent compared with the 202 approved over the March quarter last year.
Canberra March quarter unit approvals have also recorded a sharp fall over the past year, down from 1397 in 2016 to 748 this year – a decline of 649 or 46.5 per cent. Although unit approval data can be volatile, the underlying trend for Canberra has been downward over the past year.
This week the federal government announced in the budget several policy initiatives designed to alleviate perceived housing market imbalances. These included allowing first home buyers to save home loan deposits through superannuation accounts, incentives for downsizers to sell larger homes and financial penalties for foreign investors that leave investment properties vacant.
The government also announced specific initiatives designed to directly increase the supply of new housing.
Although these measures are welcomed they are unlikely to have a significant short-term impact on the housing market. The continued underperformance of the national economy as also revealed in the budget will have a more direct influence over housing market activity, particularly in regard to the likely future direction of official interest rates.
Latest ABS retail turnover data released this week reinforced the challenges for the national economy with the seasonally adjusted national result for March falling for the second consecutive month.
This was the first back-to back fall in retail turnover since November 2012 and signals a national economy stuck in second gear – and slowing with higher unemployment, underemployment and record low incomes growth predictably impacting consumer spending.
Dr Andrew Wilson is Domain Group chief economist. Twitter@DocAndrewWilson Join on LinkedIn and Facebook at MyHousingMarket.