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Dwelling approvals rise as timber shortages ease

Dwelling approvals jumped 8.2 per cent in December according to new data, with imported timber helping to ease supply chain issues and building delays.

According to new Australian Bureau of Statistics (ABS) data, December’s boost in building approvals follows a 2.6 per cent rise in November.

New South Wales recorded the biggest surge in dwelling approvals, up 32.1 per cent, while Victoria increased 2.5 per cent.

But things weren’t so rosy in other parts of the country with dwelling approvals falling 14.8 per cent in Queensland, 7.7 per cent in Western Australia, 7.4 per cent in Tasmania, and 0.3 per cent in South Australia, in seasonally adjusted terms.

ABS Director of Construction Statistics Daniel Rossi said private sector approvals underpinned the rise in dwelling approvals.

“The rise in the total number of dwellings approved in December was driven by an increase in approvals for private sector dwellings excluding houses, which rose 27.5 per cent,” Mr Rossi said.

“Private sector house approvals remained subdued, falling 1.8 per cent in December, following a 1.6 per cent decline in November. The series has fallen 31.5 per cent since the April 2021 peak.”

Source: ABS

Approvals for private sector houses rose in Western Australia (0.8 per cent), but fell in all other mainland states: New South Wales (down 7.9 per cent), South Australia (down 7.1 per cent), Victoria (down 1.5 per cent) and Queensland (down 0.7 per cent), in seasonally adjusted terms.

Despite the falls, Mr Rossi said demand for new houses was still strong.

“While approvals for private houses have fallen from all-time highs, the series remains at historically elevated levels, with the December result 20.5 per cent higher than the pre-pandemic level in December 2019,” he said.

HIA Economist Tom Devitt said demand for new homes was the highest on record last year.

“Building approvals for detached housing also remained elevated at the end of 2021 to produce the strongest year on record,” he said.

“There were over 150,000 approvals for detached homes in 2021, which was 26 per cent up on the previous year and 11 per cent higher than the previous calendar year record set in 1988.”

The soaring demand, combined with closed international borders, skills shortages and rising material costs have significantly impacted builders and caused timber shortages.

But Mr Devitt said the tight supply of timber was starting to subside with imported materials filling the gap.

“Shortages of timber have caused extended delays to house building over the last year and a half,” Mr Devitt said.

“International trade data released today by the Australian Bureau of Statistics shows that global supply chains are gradually meeting the demands of the pandemic.

“In the final quarter of 2021, the value of select wood imports reached their highest level on record, as part of the continuing trend from mid-2020.

“Timber is predominantly produced domestically but excess demand, such as in a boom year like 2021, is largely sourced from overseas markets.

“Supply chain developments like this will help ease pressures in home building and the broader economy.”

Mr Devitt predicts demand for building is set to continue for some time.

“This boom is set to keep builders busy this year and into 2023,” he said.

“The main constraint facing builders this year will continue to be the price and availability of land, labour and materials.

“Properly functioning supply chains will go a long way towards helping to ease these pressures.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.