Reduced home building in Canberra could put pressure on prices: Andrew Wilson

Home building in the ACT remains subdued with reduced supply likely to continue to put upward pressure on already high and recently sharply rising prices and rents.

Latest ABS data reveals that 212 homes were approved for building in the ACT over the June quarter. Although this was higher than the 185 approved over the previous March quarter, it remains well below the 398 house approvals recorded over the June quarter last year.

Over the full year ending June 2017, 1054 ACT houses were approved for building which was 3.8 percent fewer than the 1096 recorded over the previous year ending June 2016.

Unit approvals were also down over the quarter, falling sharply by 206 to 372. Over the year however, 2781 units were approved for building in the ACT which was 485 more or an increase of 21.1 percent compared to the 2296 approved over the previous year ending June.

Moncrieff has been clearly the most popular ACT suburb for house building approvals over the first 6 months of this year with 107 recorded. Next highest was Denman Prospect with 49 followed by Throsby 23 and Lawson 19.

Braddon is the most popular suburb in the ACT for unit approvals over the first half of the year with 258 recorded followed by Coombs 176, Campbell 170, Amaroo 142 and Greenway 62.

Latest wage data from the ABS remains a concern with the seasonally adjusted national wage index increasing by just 0.5 percent over the June quarter which was a fall compared to the previous quarter and remains at near record low levels.

Annual wage growth was just 1.9 percent which remains a record low in the series and reflects a generally subdued economic climate. The ACT also recorded an annual wage index increase of just 1.9 percent.

National annual incomes growth has matched annual inflation at 1.9 percent over the June quarter indicating an economy going nowhere.

Dr Andrew Wilson is Domain Group Chief Economist. Twitter@DocAndrewWilson Join on LinkedIn and Facebook at MyHousingMarket.