A fall in April's building approvals by 5% was the result of a steep decline in apartment approvals. The outlook for the Australian housing market is mixed with some in-demand new projects in the pipeline, while residential property prices have already started to fall.
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Fall in building approvals clouds the outlook for ASX REIT investors
The outlook for REITs operating in the housing sector remains mixed, including Stockland Corporation Ltd (ASX:SGP), Mirvac Group (ASX:MGR) and Lendlease Group (ASX:LLC).
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Over the year there is expected to be an oversupply of apartments and tighter lending standards, which will contribute to further softness in prices.
Government data has already shown that lending to housing investors was down 9% in March.
Australian REITs operating in the residential housing market, especially those that develop apartments, will be under pressure and are likely to see further weakness in prices and demand over the next few years. Stockland Corporation Ltd (ASX: SGP) was downgraded to a sell by UBS based on the weaker outlook. Mirvac Group (ASX:MGR) and Lendlease Group (ASX :LLC), are also involved in the residential housing market.
