“The volume of new home approvals appears to have peaked in late 2017 and has cooled modestly during the year,” stated Tim Reardon, HIA’s Principal Economist.

Recently released ABS Building Approvals data shows a 3.2 per cent decline in May compared with the previous month.

“This modest reduction in approvals is consistent with other data showing that the housing market is cooling from a record high volume.

“The market is cooling for a number of reasons including a slowdown in inward migration since July 2017, constraints on investor finance imposed by state and federal governments and falling house prices.

“A slowing in Australia’s population growth since June 2017 coincides with changes to visa requirements announced early last year. Since then Australia has experienced almost a year of slowing population growth.

“Finance has become increasingly difficult to access for home purchasers. Restrictions on lending to investors and rising borrowing costs have seen credit growth squeezed. Falling house prices in metropolitan areas have also contributed to banks tightening their lending conditions which have further constrained the availability of finance.

“Irrespective of all of these negative influences, the volume of approvals of new detached houses remains the strongest overall conditions we have seen in 15 years.

“The detached house building market remains resilient and the volume of house approvals during the three months to May was 3.1 per cent higher than a year ago.

“We expect the trend – of slowing building approvals – to be modest throughout 2018 as employment and economic growth remain solid,” concluded Mr Reardon.

Dwelling approvals in May fell in Queensland (4.2 per cent), Victoria (2.7 per cent), Tasmania (2.0 per cent) and Western Australia (0.8 per cent) in trend terms and rose in South Australia (4.3 per cent), Northern Territory (2.8 per cent) and Australian Capital Territory (1.5 per cent), and were flat in NSW.