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Dwelling approvals fell in August

The number of dwellings approved fell 1.6 per cent, in seasonally adjusted terms, according to data released by the Australian Bureau of Statistics today. 

“The decline was driven by private sector dwellings excluding houses, which fell 11.0 per cent,” Director of Construction Statistics at the ABS, Daniel Rossi explained.

“Meanwhile, private sector houses rose by 4.8 per cent, following an 8.6 per cent increase in July.” 

This suggests that apartments are the culprit.

“The August results indicate increasing demand for detached housing following the relaxation of restrictions in most states and territories.

“However, approvals for apartments remain weak, at near eight-year lows.”

Not all states and territories have performed equally though.

The ABS report explains that across the states and territories, dwelling approvals fell in Tasmania (26.2 per cent), New South Wales (14.2 per cent), and South Australia (4.8 per cent).

Rises were recorded in Western Australia (33.8 per cent), Queensland (8.1 per cent), and Victoria (1.8 per cent).

Approvals for private sector houses rose in Western Australia (34.9 per cent), Queensland (13.9 per cent), and South Australia (1.4 per cent).

Declines were recorded in Victoria (1.0 per cent) and New South Wales (0.3 per cent).

Housing Industry Association economist, Angela Lillicrap suggests the impact of HomeBuilder is responsible for the “significant divergence between the outlook for detached and multi-unit dwellings,” pointing to WA and Queensland as the leaders of this shift.

“After a number of years of decline, building approvals in Western Australia increased by 32.9 per cent in the month of August.

“This is consistent with other leading indicators that show that HomeBuilder and the State Government’s Building Bonus have stimulated demand for new homes,” Ms Lillicrap explained.

“Western Australia also had a very short pipeline of work and these approvals will lead to the commencement of building work on the ground within weeks.

“This surge lifts the number of approvals to levels last experienced in 2018.

“Queensland also saw a 13.4 per cent increase in detached building approvals, confirming that it is also experiencing a surge in new work entering the building pipeline, also from a low base.

Ms Lillicrap said the lack of HomeBuilder impact in other states reflects longer processing times with local councils and delays in the finalisation of building plans between the customer and builder, and a stronger pipeline of existing work.

“New Home Sales data also suggests that detached house approvals will continue to grow over coming months and across all jurisdictions.

“Multi-unit approvals fell by 12.9 per cent in the month to be 14.1 per cent below this time last year.

“The small number of multi-unit projects that are gaining approval at this time are likely to have commenced the planning and building approval process years ago.

“The multi-unit market has cooled since 2018, after several years of record levels of construction.

“Activity in this part of the market is likely to remain depressed until there is greater certainty about the pathway for overseas migration to be restored,” concluded Ms Lillicrap.

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