The ABS released its dwelling approvals data today for May.
Weak figures for the month, although over the year, approvals have ticked up.
Dwelling units approved
Private sector houses approved
Source: ABS
On the face of it, the annual figures don't look too bad, they are definitely moving up, which seems encouraging.
The month-to-month data is volatile and the small fall in approvals in May was driven my a large drop in NSW dwelling approvals.
It's comparing these figures to long-term averages that is more worrying.
Total approvals are more or less in line with their long-term averages, which would be fine...except for the fact that the population is absolutely booming, which the latest population figures showing a 12 month increase of 392,500 persons.
Australia still needs to do better than this, and also must convert approvals into construction.
Australia still needs to do better than this, and also must convert approvals into construction.
Moreover, new dwellings are often not meeting the demands of homebuyers.
Other worrying trends are afoot.
SQM reported today an alarming drop in the stock on market in Sydney (-23.1% y/y) as well as showing drops nationwide, albeit more moderate falls (-5.4% y/y). Sydney is at risk of becoming a basket case unless the supply issue is fixed.
Source: SQM
And Sydney dwelling prices are rising all the while.
Residex reported that the median house prices are up nationally by 2.35% over the last quarter and the median price of a house in Sydney has now moved above $700,000.
RP Data's index is also showing Sydney house prices booming along, while SMH reports a "buying frenzy" and "fear of missing out" in the sub $1 million market.
The reasonings given are many: low interest rates, Asian buyers, irrational exuberance of investors.
But ultimately, absent a spike in unemployment, prices in Sydney are going to keep rising unless the city can fix its supply issue.
"As Sydney's property market "sizzles" home buyers are catching "fear-of-missing-out disease", a leading buyer's agent says.
Property values shot up 2.7 per cent in June, according to RP Data, and Australian Property Monitors auction clearance rates averaged 75 per cent over the month. Nine out of 10 of the reported auctions in the inner west sold under the hammer last weekend.
It's a far cry from last June when the Sydney average was 54.5 per cent.
According to Rich Harvey, of Propertybuyer, the market for property under $1 million is "sizzling".
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“Buyers are frantically chasing properties with little regard of comparative values,” Mr Harvey said.
Although the improving market is encouraging many sellers to put their homes on the market – APM says there were more auction listings and sales than ever before in June – it's not the case in many suburbs.
Belle Property Surry Hills principal Charles Touma said listings were down by more than half in his area and he agreed with Mr Harvey's assessment.
"There's a lot of panic buying going on," Mr Touma said. "There's a real fear that the market is going to continue rising and they are going to miss out.
"And you have to be aggressive because there aren't a lot of properties to fall back on: the low stock and low interest rates are all contributing to this."
Making matters worse was the high number of investors."
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