Build figures on the rise

Bendigo Weekly | Bendigo Weekly | 11-Jan-2018

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Construction rates are increasing.
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APPROVALS for new dwellings jumped by 11.7 per cent during November to reach their highest level since August 2016.

Housing Industry Association senior economist Shane Garrett said growth was driven by multi-units which saw approvals expand by 28.7 per cent during the month. 

“The number of new detached house approvals actually declined by 2.8 per cent in November but the number of approvals remains consistent with what we saw throughout 2017,” he said.

Mr Garrett said even though multi-unit approvals can vary hugely from month to month, the result for November was still remarkably robust given that building approval volumes have been trending down for some time. 

“The geographic reach of November’s expansion was quite narrow with Melbourne’s booming market accounting for the lion’s share of the increase nationally. Victoria is easily the fastest growing state in terms of population – it is encouraging that new housing supply in the state is responding to the strongly growing demand,” he said.

“Newly-built dwellings are a vital component of the rental market – and properly functioning rental markets are crucial in accommodating employment growth and economic development. It is very important that taxation settings relating to investors continue to support the provision of adequate rental supply.”

During November 2017, the largest increase in new dwelling approvals occurred in Victoria (up 37.9 per cent), followed by Tasmania (10.6 per cent) and Western Australia (3.9 per cent). 

Meanwhile, demand for fixed rate home loans has fallen for the fourth month in a row, according to new data.  

The latest national home loan approval data from Mortgage Choice found fixed rate home loans accounted for 22.81 per cent of all loans written throughout December. 

Mortgage Choice chief executive officer John Flavell said Australia had seen a slight drop in the proportion of borrowers opting for a fixed rate mortgage over the past few months. 

“In August 2017, approximately 31 per cent of all borrowers selected a fixed rate mortgage. Since that time, fixed rate demand has fallen 8.24 per cent to where it is today,” he said.

He said the drop in fixed rate demand was not surprising, given the Reserve Bank of Australia has kept the official cash rate on hold for more than a year.

“And, with all signs suggesting that the cash rate could remain lower for longer, the desire for borrowers to lock into a fixed rate mortgage is weakening,” Mr Flavell said.

While fixed rate demand has taken a hit in recent months, Mr Flavell said it was important for borrowers to note that fixed rate loans were still good products. 

“At the end of the day, the type of home loan a customer chooses will all come down to their unique personal situation and what they feel comfortable with. While we are seeing fewer borrowers locking into fixed rate mortgages, many lenders are still offering very sharp rates in this area,” he said.

“If borrowers feel more secure in a fixed rate product, they should consider travelling down this path.” 

Fixed rate demand was the lowest in Victoria where it accounted for 15.4 per cent of all home loans written. 

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