The decline in building approvals has become so alarming that it needs government intervention, according to market experts.
Building approvals in October declined by 8.1% on a seasonally-adjusted basis, figures from the Australian Bureau of Statistics (ABS) show. On trend terms, the October fall was 0.8%, the 23rd consecutive month of decline.
"The fall was driven by approvals for private sector houses. Private dwellings excluding houses also fell," said Daniel Rossi, director of construction statistics at the ABS.
Dwelling approvals fell in the Northern Territory, New South Wales, Queensland, and Western Australia. The remaining states recorded increases in trend terms.
"As expected, all eastern seaboard states saw a weaker detached house result, with the continued leg down in greenfield land sale volumes coming through in the October data," said Maree Kilroy, economist at BIS Oxford Economics said.
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Based on Kilroy's analysis, Victoria and New South Wales recorded their weakest monthly approval since 2013.
"Despite the recent recovery in residential property prices, it is not until June quarter next year that an upturn in approvals is anticipated to kick through," Kilroy said.
This could serve as a warning for the government to take action, said Property Council of Australia chief executive Ken Morrison.
"Housing construction is a key driver for the economy, and it has been slowing down significantly. This matters for jobs in the housing construction industry and the economic activity they support," he said.
The decline in building approvals could also serve as a signal for the need to tackle housing affordability issues, particularly in the largest cities.
"Our growing population needs housing, and governments need a laser-like focus on their planning regimes to ensure that we can bring new housing to the market where and when it's needed. We also need to ensure that prospective home-buyers can access housing finance in a timely and efficient way," Morrison said.
Furthermore, it appears the recent growth drivers, including the three rate cuts by the central bank, have yet to impact building approvals, said Housing Industry Association economist Angela Lillicrap.
“It is evident that the pick-up seen in other indicators including housing finance and new home sales is yet to flow through to building approvals. With healthier conditions in the established home market, we are optimistic that we will see improvement the new home market in the coming months,” she said.
