Australia: Looming housing shortage – ANZ

Felicity Emmett, senior economist at ANZ, notes that Australia’s house prices are rising sharply, but the ongoing weakness in building approvals has raised concerns about a looming housing shortage, particularly in the apartment market.

Key Quotes

“The lags between interest rate cuts and building approvals are lengthening as apartments (which take longer to approve and longer to build) become more significant in the housing mix. There are signs of a pick-up in some of construction’s other leading indicators, which suggest a turn in approvals is imminent.”

“The decline in approvals to date suggests that construction will fall for some months yet, not picking up until mid-2020. That fall will feed through to housing supply, and vacancy rates are set to decline over 2020 and 2021. Across the two major capital cities, the shortage of housing looks likely to be more marked in Melbourne than Sydney.”