building approvals and home loans rise in august 2023
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  • New owner-occupier loan commitments for dwellings rose 2.5%.
  • Dwelling approvals rose 7% in seasonally adjusted terms.
  • Master Builders forecasts a decline in home starts

Upticks in dwelling approvals and home lending have been recorded across August, according to the latest from the Australian Bureau of Statistics (ABS).

Dwelling approvals rose 7.0% in seasonally adjusted terms, and owner-occupier loan commitments for dwellings rose 2.5%.

New loans rise in August

New owner-occupier loan commitments for dwellings rose 2.5% in August, according to the ABS. However, the latest is still 12.3% below last year’s figures.

“Since February 2023, the number of new owner‑occupier loans appears to have returned to levels seen before the COVID-19 pandemic began, well below the peak in January 2021,” said ABS head of finance statistics, Mish Tan.

New owner-occupier dwelling loans vs external refinancing, number of commitments, Australia

Source: Australian Bureau of Statistics, new owner-occupier loans increased 2.5% in August 3/10/2023.

Refinancing numbers dropped, with the ABS figures on refinanced owner-occupied loan commitments between lenders falling 5.4% to 26,539; refinancing was at an all-time high last month.

“Since November 2022, the number of refinanced loans has been above the number of new owner‑occupier loan commitments. Refinancing has remained at unprecedented levels as households continued to seek better loans amid a high interest rate environment,” said Tan.

More homes to kick off construction

The latest 7% rise in dwelling approvals follows a 7.4% fall in July. The seasonally adjusted total homes approved for August came in at 13,647, with private sector houses comprising 8,635 homes, and private sector dwellings excluding houses coming in at 4,779.

“Approvals for private sector houses rose by 5.8%, following three months of stable movements,” said ABS head of construction statistics, Daniel Rossi.

“Approvals in the more volatile private sector dwellings excluding houses series rose by 9.4%, following a 14.6% fall in July”.

Dwelling units approved, by building type, seasonally adjusted

Source: Australian Bureau of Statistics, dwelling approvals rise in August 3/10/2023.

While there was a broad uplift, results were mixed state by state. New South Wales, Victoria, and Western Australia all recorded rises in dwelling approvals, up 12.5%, 22.2%, and 12.3% respectively. Queensland, Tasmania, and South Australia all recorded declines, down 26.9%, 10.1%, and 6.9% respectively.

“Both detached houses and higher density home building approvals shared in the expansion up 6.0% and 8.8% respectively,” observed Master Builders Australia (MBA) chief economist, Shane Garrett.

“However, the volume of new approvals is still considerably lower than this time last year.

“Over the year to August 2022, new home building approvals are still down by 13.0%.

“Detached house approvals have suffered a sharp reversal since their peak during the COVID.

“The pipeline of higher density home building activity, which is critical to ensuring adequate rental supply, has been weak since even before the pandemic.

“We still need to see a sustained improvement in the volume of higher density home building in order to relieve inflation which is at 15-year highs,” said Garrett.

Rate reprieve delivered

“The decision by the RBA to hold interest rates for a fourth consecutive month is a welcome reprieve for mortgage holders and renters who are bearing the brunt of the cost of living crisis,” added MBA CEO, Denita Wawn.

“The effect of the RBA’s tightening cycle is still flowing through to the sector and dampening investment.

“Master Builders has forecast 2023-24 will see home starts decline by another 2.1% to around 170,100, well below the 200,000 needed per year to meet population growth.”

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