The region could soon experience a “squeeze” on first home buyers and private renters, the Illawarra Business Chamber says.
Building approval data from the Australian Bureau of Statistics indicates a slowing in the number of approvals for the Illawarra.
Illawarra-wide, there have been 535 less building approvals in the period April 2016 to March 2017 than for the previous 12 months.
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The drop is most severe in Wollongong, down almost 29 per cent, and the Shoalhaven, down almost 21 per cent.
However, approvals are up 90.2 per cent in Kiama.
IBC executive director Chris Lamont said a reduction in building approvals will put further pressure on housing affordability.
“In terms of the value of projects that have been approved over probably 12-18 months has held up pretty well, but now we’re seeing a decline in the number of residential building starts, and that’s a concern because that’s a barometer of what you’re going to see in terms of new supply over the next 12-24 months,” he said.
“The most vulnerable in the Wollongong market are first home buyers, and then those in the private rental market. So I think you’ll see a squeeze on both, with there just not being affordable housing product coming out of the ground. So first home buyers will be forced to compete with existing stock.
“(For renters) if you’ve got a decline in new house starts and that continued growth in the population and continued drive out of Sydney into the Illawarra, I think it’s going to get that much tougher.”
Mr Lamont said it is possible recent movements in interest rates and tightening around home lending are impacting approvals. He said there is a need to increase supply of affordable and greenfield housing to meet current and future demand.