The tighter credit conditions affecting property prices are also impacting the construction sector. Presales of units/apartments are increasingly difficult to obtain, which makes financing new projects challenging. Respondents to the ANZ-Property Council survey suggest the outlook for finance is the weakest since the survey commenced.
Other indicators are also soft. Building approvals are trending 6 per cent lower than their most-recent peak at the end of 2017. Housing finance approvals for the construction or purchase of new dwellings have come off by a similar amount, pointing toward further weakness in building approvals in coming months.
In all, ANZ Research expects housing investment will actually rise by about 2 per cent in 2018, largely due to strong growth in the first half of the year. But the decline in investment is then likely to gather pace through 2019 and 2020, shedding around 6 per cent to 7 per cent each year.