Wednesday, 17 March 2010 11:13

The collapse of apartment approvals in January spooked many in the industry and government.

The country needs more medium density accommodation but new supply seems choked - by a lack of finance as well as by planning constraints, according to a report in the AFR.

Two weeks ago RBA governor Glenn Stevens, who early identified the shortage of development finance, pointed to a turning point in approvals for multi-unit construction.

But in January other dwelling approvals, in spite of being up almost 80% on 2009, where down 19% on the month.

Strip out the 30% of approvals related to social housing programs and the numbers look even bleaker.

There is no question about the problems of finance and planning - but January is an unusual month.

Stevens, who has pretty good property intelligence, will probably be correct.

KPMG's head of real estate and construction, Steve Gatt, says funding of developments has been affected by less active lenders, tighter lending criteria and the introduction of Basel II.

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Building approvals change ahead is copyright Your Mortgage and has been republished with permission.