- Dwelling approvals rose 7.5% in October, according to the ABS.
- The uptick follows several pauses to the interest rates.
- Industry remains concerned over the low levels of approvals.
Australia recorded an uptick in building approvals in October, up 7.5% in seasonally adjusted terms, according to the Australian Bureau of Statistics (ABS).
The latest uptick follows a September fall in approvals of 4%.
“Approvals for private sector dwellings excluding houses increased 19.5%, following a 3.4% fall in September,” said ABS head of construction statistics, Daniel Rossi.
“Approvals for private sector houses rose 2.2%, following a 4.7% September decrease.”
“Despite the monthly increase, total dwellings approved have been low this financial year. In original terms, 55,029 dwellings were approved between July and October in 2023, compared with 65,599 over the same period in 2022.”
Western Australia continues to buck the national trend
HIA WA Executive Director, Michael McGowan, said building approvals released by the ABS today show WA has maintained a steady increase in the supply of new homes in 2023 with three months in a row of 1000+ approvals.
“When compared to pre-pandemic levels the number of detached homes approved in WA is 19.4% higher in the three months to October 2023.
“This growth remains consistent with the growth in capacity of the industry workforce and suggests that the rise in the cash rate has not materially obscured demand and driven down WA’s detached home market as in the other states. It is also built of the back of a stable economy.”
Michael McGowan, HIA
“A key reason for this remains that much of the activity has been driven by East Coast investors who continue to see a positive economic outlook combined with a low rental vacancy rate and affordable housing when compared with East Coast house and land packages in excess of $1 million.
“All indications suggest that the current rate of approvals will continue into 2024 as the industry continues to recover from the challenges that have been presented over the last three years,” concluded McGowan.
Wider concerns over continued low levels of approvals
Against the backdrop of improved building approvals when interest rates were on pause, Master Builders Australia (MBA) CEO, Denita Wawn, cautioned that with interest rate rises back on the move and broader industry concerns, positive gains could be quickly eroded.
Providing analysis on the monthly data, chief economist, Shane Garrett, said the total number of new home building approvals rose to 14,223 in seasonally-adjusted terms during October.
“This was 7.5% up on the previous month and represents the highest result since May.
“October’s solid gain came in the wake of the four-month pause in RBA interest rate hikes.
“During October, there was a particularly large increase in the volume of higher density home building approvals (+19.5%).
“This is important because the rental market is currently in desperate need of more medium and high-density homes.
“The shortage of rental accommodation recently drove rental price inflation to its fastest pace in almost 15 years.”
Shane Garrett, MBA
“Delivering more increases in higher density housing output will help to further dilute rental market pressures.
“New detached house approvals saw modest growth of +2.2 per cent during October.
“However, activity on the detached housing side of the market remains at a low ebb due to development-ready land shortages and the detrimental effect of interest increases,” said Garrett.
UDIA national president, Col Dutton, said: “The reality is that instead of unlocking land supply and fast-tracking approvals, we have fewer approvals than we did 12 months ago and this needs to be reversed as a priority.”
“UDIA analysis indicates that there is a 22% attrition rate between approvals and actual dwelling completions, which means the drop in housing is greater than the number suggests.
“We urgently need to boost housing supply across the entire continuum and especially housing for the vast majority of ordinary Australians facing cost of living pressures,” he said.
