04 Oct 2017

Dwelling approvals continue rising

The number of dwelling approvals went up by 1.1% in August representing a seven-month increase, according to figures from the Australian Bureau of Statistics (ABS) released yesterday (3 October).

“Dwelling approvals have shown signs of strength in recent months, although are still below the record high in 2016,” said Bill Becker, ABS assistant director of construction statistics. “The August 2017 data showed that the number of dwellings approved is now 6.5% lower than in the same month last year in trend terms.”

The number of approvals in trend terms rose in all states and territories except Western Australia. Percentage increases and decreases can be seen below:

Australian Capital Territory (+8.9%)
Northern Territory (+8.3%)
Victoria (+1.5%)
Tasmania (+1.2%)
Queensland (+1.0%)
South Australia (+0.9%)
New South Wales (+0.7%)
Western Australia (-0.8%)

These trends are bad news for the doomsayers, said CommSec chief economist Craig James.

“Approvals to build new homes are still rising – in fact at seven-month highs in trend terms. Housing supply is continuing to adjust to rising population growth, and that means more houses and apartments are being built. Activity is easing off record highs, but clearly a flat trajectory is being traversed.”

Looking at private sector housing in trend terms, the average number of approvals rose 0.9% in August across Australia. This increased in Queensland (+2.0%), South Australia (+1.4%), Victoria (+1.1%) and Western Australia (+0.3%) but dropped in New South Wales (-0.3%).

In seasonally adjusted terms, the number of dwelling approvals rose by 0.4% in August across Australia. This was driven by an increase of 4.8% in the number of private dwellings excluding houses. On the other hand private housing approvals fell by 0.6%.

The value of total building approvals dropped by 0.3% across the month in trend terms, marking the end of a six-month period of growth. The value of residential building increased by 0.7% while non-residential building dropped by 1.8%.

Demand for semi-detached houses may be supplying Australia’s construction sector with a second wind, said James.

“Aussies are wary of the maintenance of a big house but they want a bit of backyard and some independence. The solution? Semi-detached homes like townhouses and terrace homes. Semi-detached homes now account for 15% of approvals – the highest share in 20 years.”