Mass of new apartments may reduce price pressures

A record amount of new housing is in the pipeline, driven by strong growth in apartment living and high-rise units.

There were 19,414 building approvals recorded in May, according to the Australian Bureau of Statistics, representing a 17.6 per cent jump on the previous year.

Private sector house approval numbers actually fell 2.3 per cent, but this was offset by a 46.0 per cent jump in approvals for private sector dwellings excluding houses.

The apartment boom was partly fuelled by a record number of approvals for buildings with four storeys or more.

May was the third-highest month on record, while the 218,442 approvals that were recorded in the year to May was a record result.

Housing Industry Association senior economist Shane Garrett said the new data suggests that there will be a solid pipeline of new home-building during the second half of 2015.

“However, the recent strengthening of price pressures in several markets indicates that the supply of new homes will need to stay at elevated levels in order to fully address demand,” Mr Garrett said.

Master Builders Australia chief economist Peter Jones said supply has yet to catch up with demand.

“Growth in residential building can be expected to continue for some time to come, putting downward pressure on house prices, which should allay fears of a housing bubble.”

[Related: The previous month’s results]

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