Apartment building dives

THE credit crisis is taking its toll on apartment construction, with the number of new blocks started diving 17.1 per cent in the June quarter.

New private houses are still being built, with a 4.1 pwer cent rise in commencements in the quarter, but economists believe the total number of new dwelling units being built is not enough to keep pace with growth in the population.

Commonwealth Bank economist James McIntyre said the national stock of houses was rising at its slowest pace since months after the introduction of GST in 2000.

"With strong population growth and continued growth in incomes, rents will continue to rise at near 10 per cent levels for some time," he said.

The world credit crisis has made it much more difficult to arrange finance for any sort of commercial building. Apartments make up about 30 per cent of all new housing.

Mr McIntyre said housing construction was running at about 157,000 new homes a year, while demand from rapid population growth is rising at between 190,000 and 210,000 a year.

Turnover in the existing housing market remains slow, as individuals become more wary about taking on housing debt.

Auction clearance rates down to around 50 per cent or less in all state capitals except for Melbourne, according to Australian Property Monitors.

Perth is the worst effected market, with only 21 per cent of the properties put to auction in the last two months actually being sold.

Property is also failing to sell in Brisbane, with only 30 per cent of the houses put up for auction in August selling. In Sydney, the clearance rate last month was 52 per cent while it was 62 per cent in Melbourne and 40 per cent in Adelaide.

"Auction clearance rates for all capital cities are well below their average and significantly below the rates witnessed this time last year," APN economist, Liam O'Hara said.

The number of properties being put up for auction has been increasing in most cities

David Uren, Economics correspondent | September 16, 2008 | The Australian