NSW Real Estate Market Sees High Apartment Approvals

Residential real estate approvals have increased across the country over the month of December 2013, leading to more supply in the market in coming months.

Information from the Australian Bureau of Statistics (ABS) found that dwelling approvals rose by 1.5 per cent in trend terms over December, after being on the rise for a total of 24 consecutive months.

Queensland, South Australia and Victoria were the states to see the largest increases in dwelling approvals at 3.8 per cent, 3.5 per cent and 2.9 per cent respectively. On the other hand, approvals decreased significantly in the Northern Territory by 15.8 per cent.

At the same time, the value of total building approved has also risen in December by 3.1 per cent after increasing over the past 23 months.

Apartment approvals strong in New South Wales

While building approvals have risen in many parts of the country, the figure remained "essentially unchanged" for New South Wales. However, the ABS information showed an interesting trend in the state's unit market.

According to the data, multi-unit and apartment approvals are still continuing to rise and have increased for a total of 22 months. As a result, this activity could demonstrate a preferred choice for high density apartments in Sydney and other major city areas in New South Wales by home buyers and investors alike.

"Apartment approvals continue to move solidly upwards in NSW," Urban Taskforce CEO Chris Johnson said in a February 3 statement.

"This indicates a continual shift towards urban living fuelled by low interest rates and off shore investments."

Furthermore, apartments in Sydney are currently recording higher rental yields than houses, which may be a reason why approvals have increased over December. Recent information from RP Data found rental yields have reached 4.7 per cent for units in January, while houses recorded 3.9 per cent.

Mr Johnson noted that this rise in apartment approvals shows that "confidence is back in the investment and development industry", however the state's planning reforms are needed in order to support this growth further.

"The apartment approval boom does not necessarily mean that they will all be built in the near future. A number of very big projects are going through the planning system that will lead to construction over many years," he noted.

With the Reserve Bank of Australia (RBA) holding interest rates for the longest period in seven years, the financial conditions on offer have created a very attractive atmosphere for investors to enter the market.