Housing Industry Association predicts drop in new Canberra unit construction

The construction of new apartments in Canberra over the next financial year is predicted to tumble by almost a third, according to a new report.

The Housing Industry Association’s ACT State Outlook forecasts a 33.1 per cent downturn in new multi-unit commencements in the 2017-2018 year.

New apartment construction has dropped by 11.6 per cent over the 2016-2017 financial year. 

The number of standalone houses being built in the ACT, in contrast, has jumped 13 per cent over the previous financial year and is expected to surge by 28.2 per cent over the 2017-2018 year.

The Housing Industry Association’s ACT and Southern NSW executive director Greg Weller said the fall in apartment construction was on the back of “exceptionally high growth”.

“Apartment building has been very strong,” he said.

“As long as that’s the case, you would expect to see a significant rebalancing in apartment building. It couldn’t stay at that level over an extended period of time.

“Yes, we’re going to see a bit of a slowdown…but it is nothing to be concerned about.”

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• Related: Canberra first home buyer numbers surge

Despite this forecast, the territory’s rental vacancy rate still remains low at 1.2 per cent as of June, contributing to rental growth of 1.5 per cent over a 12-month period.

Mr Weller said detached house building in the ACT was set for fairly consistent growth over the next three years.

“Consistent with previous data, the picture looks fairly bright for home building, notwithstanding the rebalancing of multi-residential building,” he said.

The number of first home buyers in Canberra has increased over the year to June, with the number of mortgage loans approved for this buying group rising by 21.8 per cent.

Owner-occupier loans jumped by 7.5 per cent over the same period.

Mr Weller said the spike in first home buyer loans might be somewhat downplayed given some young purchasers were snapping up investment properties before taking out their owner-occupier mortgage.

He said the figure also reflected the large volume of apartments built in the ACT.

“There are options out there for first home buyers in the ACT,” Mr Weller said.

“The challenge now is there is probably less choice over different housing types. The ACT needs to look at not just the cost of housing but making sure people can exercise choice in the ACT housing market as well.”