It appears that Australia's slowing population growth is affecting the overall volume of new home approvals, which declined by 3.2% in May, according to the latest figures from the statistics bureau.
Housing Industry Association principal economist Tim Reardon said while the decline is modest, it clearly shows how the housing market is cooling from a record high volume of approvals achieved last year.
“A slowing in Australia’s population growth since June 2017 coincides with changes to visa requirements announced early last year. Since then Australia has experienced almost a year of slowing population growth," he explained.
Reardon cited other factors contributing to the cooling housing market beyond slowing migration, including constraints on investor finance and falling home prices.
"Restrictions on lending to investors and rising borrowing costs have seen credit growth squeezed. Falling house prices in metropolitan areas have also contributed to banks tightening their lending conditions which have further constrained the availability of finance," he said.
Based on Building Approvals data from the Australian Bureau of Statistics, dwelling approvals declined in four states: Queensland (4.2%), Victoria (2.7%), Tasmania (2%), and Western Australia (0.8%).
New South Wales recorded a flat growth, while home approvals slumped in South Australia (4.3%), Northern Territory (2.8%), and Australian Capital Territory (1.5%).
Of all home types, the detached house building market remained resilient, as approval volume kept its steady pace and grew 3.1% in May.
“We expect the trend – of slowing building approvals – to be modest throughout 2018 as employment and economic growths remain solid," Reardon commented.