Australia is set to see an additional 200,000 new homes this year, which is positive news for the country’s economy, experts say.
Figures from the Australian Bureau of Statistics stated that the approvals for the construction of new homes jumped 2.4% in May, and were up 17.6% over the 12 months to May, reports The Australian.
However, approvals for private sector homes dropped 8.4% in May. The “other dwellings” category where apartment blocks and townhouses belong soared 16.6%.
For Commonwealth Bank senior economist Michael Workman, the increase comes as a surprise considering housing construction was already strong.
"It's quite extraordinary to get almost 18% through the year when they are already at very high levels," he was quoted as saying.
"Maybe that's one way to solve that affordability issue that's getting a lot of attention. Purely from a supply perspective you'd expect to see this enormous addition dampen price rises through this year and into the next."
Workman lamented that one problem the Australian housing market is facing today is that most of the new construction is happening in the suburbs rather than the inner city or near the beaches.
"There will be a record amount of construction activity in 2015, possibly around 215,000 new dwellings and around half of those will be multi-unit dwellings," he said.
"Historically that ratio has been closer to 30%, so we're building very different cities."