Approvals for new homes have dropped to the lowest level in two years with apartment approvals falling the most. The trend towards lower approvals means a reduction in dwelling supply, which is likely to put upward pressure on property prices.

Data released by the Australian Bureau of Statistics shows the number of dwellings approved for construction in August – 16,447 when seasonally adjusted – was down 9.4% on July and 13.6% lower than the same time last year.

The decline was led by fewer apartment approvals, down 18% month-on-month, while approvals for houses fell just 1.7%.

Housing Association of Australia economist Diwa Hopkins says the key factors are financing difficulties and reduced migration.

“Constraints on the availability of nance through the Australian Prudential Regulation Authority and increased prudential constraints by banks are restricting investment in new homes,” Hopkins says. “Population growth has slowed since the government introduced stricter visa requirements last year.”