Will 2017 be the year the housing bubble finally pops? Judging by the evidence coming out of the building industry by the ABS, lets access the data.
Total building approvals were 17,537 for the month of November which was down -2.9% month over month, & down -10.1% year over year.
Total house approvals were 9,367 which decreased -0.4% month over month, & down -4.4% year over year.
Total non-house approvals (units) were 7,893 which -5.7% month over month & 16.9% year over year.
This undoubtedly tells us the supply side of the equation is decreasing, particularly for apartments which is down over 16% over the past year.
With population growth expected to remain at record highs, the demand side of the equation will still be a problem.
Along with record low interest rates, there could even be quite large growth occurring in 2017, particularly in inner to middle rings suburbs in major capital cities on large blocks of land.
This will create a ripple effect to fringe suburbs, particularly in established areas where no supply can be added due to land regulations.
We cannot know exactly when the bubble will burst, nobody has a crystal ball, however we do believe prices will be steady if interest rates do not rise.