Figures released by the Australia Bureau of Statistics this week show 781 new detached houses were approved in October this year.
That’s 22.6 per cent higher than the previous month and the highest number since April 2016.
By comparison, the number of new detached dwellings approved has continued to fall across the country.
Master Builders SA CEO Ian Markos told InDaily he is hopeful it represents the start of a recovery for South Australia’s building industry, which has been suffering the flow-on effects of a national downturn in the housing market.
Several local construction companies have collapsed over the past 18 months, including York Civil, OAS Group and Platinum Fine Homes.
Markos nominated record low interest rates, growing credit availability and improved confidence in the outcomes of the land tax reform debate as possible drivers for the new uptick.
“Some key factors are in place for a rebound: interest rates are at record lows, meaning people can borrow more and also be more confident they can meet their repayments,” he said.
“The significant improvement in credit availability has been a game changer – the Australian Prudential Regulation Authority changed serviceability requirements by no longer expecting banks to ensure buyers could still repay their loan if its interest rate increased to at least seven per cent.
“Now banks can set their own minimum interest rate floor and make their own calculations using a 2.5 per cent buffer.”
He said he was receiving regular feedback from members suggesting changes to land tax announced in this year’s State Budget were having a negative impact on demand.
“They reported plenty of interested buyers, but a reluctance to commit,” said Markos.
“However, confidence improved as more people started to become optimistic about an improved outcome on land tax.
“Many members reported an uptick in sales during the past two months, and that appears to be reflected in the figures.”
The value of non-residential construction also increased, from $1.053 million in September to $1.171 million in October.
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