- The rise follows a 6.8% decrease in April
- The rise was largely attributed to approval of apartment developments in NSW
- Housing was much more subdued
The Australian Bureau of Statistics (ABS) has just released the latest building approvals data, with the total number of dwellings approved in the month of May rising 20.6%, in seasonally adjusted terms.
This latest spurt of growth follows a 6.8% decline in April; the development activity was largely concentrated on parts of the east coast.
“The rise in total dwellings was driven by the more volatile dwellings excluding houses series, which rose 59.4%. This increase reflected a large number of apartment developments approved in New South Wales in May,” said ABS head of construction statistics, Daniel Rossi.
“Approvals for private sector houses remain more subdued, rising 0.9%, following a 3.0% fall in April.”
Dwelling units approved, by building type, seasonally adjusted
While New South Wales (up 52.9%) led the country for total dwelling approvals, the remainder of the nation was a mixed bag, according to the ABS.
Tasmania recorded a rise of 41.1% for total dwelling approvals, with Victoria (up 15%) and Queensland (up 0.9%) also recording rises; Western Australia and South Australia recorded falls of 11.1% and 4.8%, respectively.
Australian Bureau of Statistics data found private sector housing drove the Victorian rise, up 7.3%, with the remainder of the nation seeing falls for private sector housing.
| State | Approvals for private sector houses |
|---|---|
| Victoria | +7.3% |
| South Australia | -7.2% |
| Western Australia | -4.5% |
| New South Wales | -3.4% |
| Queensland | -1.8% |
Source: ABS.
The value of total building approvals also rose significantly more than in April. The latest rise is 11.1%, whereas April saw a rise of 1.7%; the seasonally adjusted amount is $14.437 billion.
It’s welcome news – but industry cautions against unnecessary intervention
Master Builders Australia (MBA) chief executive Denita Wawn said while the bounce in higher density building approvals during May is welcome, new home lending data suggest that tough times still lie ahead.
“We will need to see a sustained recovery in higher density home building volumes before the affordability crisis in our rental market starts to abate.
“Combined with the larger than expected slowdown in inflation last week, today’s figures should give the RBA decent grounds for holding rates tomorrow.
“Increasing the construction of necessary new homes will contribute to alleviating inflationary pressures throughout the economy.
“While the fight against inflation appears to be favourably shifting, it is crucial not to jeopardise progress by imposing unnecessary cost pressures through government regulation.
Denita Wawn, MBA chief executive
“By pumping up costs right across the economy, proposed changes to industrial relations would be very counterproductive in terms of beating inflation and unduly add costs to construction,” Wawn said.
Rental market to benefit
MBA chief economist Shane Garrett said the sharp increase in unit/apartment building approvals is welcome news for the rental market given the severity of shortages and the growing cost of renting.
“The difficult conditions in the rental market are the result of prolonged underbuilding in the medium/high-density part of the market. This dates from before the pandemic,” said Garrett.
“The 12 interest rate increases we have endured so far have made it much more expensive to build new homes.
“Higher mortgage rates have also forced up the cost of providing homes to the rental market.”
