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Detached building approvals go from strength to strength

While HomeBuilder was the catalyst for improving consumer confidence in the housing market, the strength of detached building approvals is due to several factors including low interest rates.

The latest data released by the Australian Bureau of Statistics (ABS) has revealed an increase of 24.8 per cent in detached house approvals in the three months to November.

This is 31.4 per cent higher than the same time last year.

Daniel Rossi, Director of Construction Statistics at the ABS, attributed the strong demand for detached dwellings to federal and state housing stimulus measures and low interest rates.

“Approvals for private houses have surged 40 per cent since June,” he noted.

ABS Building Approvals data for detached houses rose for the fifth consecutive month in November to reach the highest number of approvals since December 1999.

HIA Economist Angela Lillicrap said HIA New Home Sales data suggests detached house building approvals will continue to be strong over the coming months.

“The extension of HomeBuilder at the end of November is not a factor in this month’s result but will see the strength in detached house approvals extend into 2021.

“The Northern Territory has seen the largest improvement over the last three months with detached house approvals more than double the same time last year,” Ms Lillicrap said, noting the very low levels of activity a year ago.

“Western Australia follows closely behind with an increase of 89.1 per cent in the three months to November compared to the same period last year.

“This is due to the pent up demand for new housing in the state, combining with HomeBuilder and the state government stimulus measures.”

Multi-unit approvals

“Multi-unit approvals have not experienced the same boom that has been seen in the detached market,” Ms Lillicrap continued.

These remain 9.7 per cent lower in the three months to November 2020 compared to the same time a year earlier.

“The multi-unit projects that gained approval in November likely commenced the planning and building approval process years ago.

“The apartment market is likely to be constrained going into 2021 due to slower population growth and a stronger preference for detached houses.”

The numbers

In seasonally adjusted terms, the number of detached dwelling approvals during the three months to November 2020 compared to the same time last year, saw the largest increase in Western Australia (+89.1 per cent), rising 2.6 per cent overall in November.

They also increased in Queensland (+27.8 per cent), New South Wales (+24.5 per cent), Victoria (+24.3 per cent), Tasmania (+22.7 per cent), and South Australia (+18.7 per cent).

In original terms, they improved in the Northern Territory (+114 per cent) and declined in the ACT (-25.9 per cent).

The number of multi-unit approvals declined in Tasmania (-81.8 per cent), South Australia (-51.0 per cent), Queensland (-18.4 per cent), Victoria (-11.3 per cent and New South Wales (-3.4 per cent).

They increased in Western Australia (+111.5 per cent). They declined in original terms in the ACT (-25.9 per cent) and increased in the NT (+90.0 per cent).

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