Home building falls in Adelaide – but still solid

Home building has weakened recently in Adelaide, however underlying activity remains reasonably solid and reflects the recent generally resilient performance of the local housing market.

The ABS reported that 476 houses were approved for building in Adelaide over September which was marginally down on the 531 approved over August and the 529 approved over September last year.

Over the first nine months of this year 4118 houses have been approved for building which is a sharp fall of 11.5 per cent, or 533 fewer than the 4651 approved over the same period last year.

New unit approvals were also down over September, falling from the 302 recorded over the previous month to 284.

Despite the monthly fall, 2291 units have been approved for building over the first nine months of this year which is 18.3 per cent higher or an increase of 354 over 1937 approved over the same period last year.

A total of 760 dwellings were approved for building over September – lower than the 876 approvals recorded over September last year.

So far this year 6409 home building approvals have been reported in Adelaide which is a slight fall of 179 or 2.7 per cent fewer than the 6588 recorded over the same period last year.

Although overall home building activity remains solid in Adelaide, recent declining levels of residential construction although modest are a concern for the local economy – particularly given the sharp rise in unemployment over the past year from 6.6 per cent to 7.6 per cent.

Notwithstanding the clear economic benefits, new supply in the Adelaide apartment market, however, continues to move ahead of demand over the shorter term, resulting in downward pressure on prices and rents in that market sector.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson