Building approvals for houses climb for sixth month in a row

Aerial shot of houses in Australia.

Building approvals for private houses climbed 15.8 per cent in December 2020, marking the sixth straight month of growth according to the the Australian Bureau of Statistics.

Approvals for detached housing were highest in South Australia (33.6 per cent), followed by Victoria (17.2 per cent), New South Wales (16.2 per cent) and Queensland (7.5 per cent).

New South Wales posted its highest private house approval figure since March 2000. Queensland also experienced a surge, recording its highest approval numbers since September 1994.

Overall, the total number of dwellings approved in December increased by 10.9 per cent in seasonally adjusted terms.

Daniel Rossi, director of construction statistics at the ABS said current interest rate settings and a host of government programs have played a major part in supporting ongoing growth.

"Despite the uncertainty experienced by developers and households during 2020, the total number of dwellings approved in the calendar year was 4.8 per cent higher than in 2019," he said.

“Federal and state housing stimulus measures, along with record low interest rates have contributed to strong demand for detached dwellings.”

Housing Industry Association economist, Angela Lillicrap said the result was “exceptional” considering how much other sectors of the economy had been rattled by the coronavirus pandemic.

“The surge in the number of building approvals has continued each month since the announcement of HomeBuilder in June,” she said.

“This volume of work will ensure ongoing employment growth in the sector through 2021.”

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She also noted that data for building approvals typically lags behind other leading indicators such as new home sales and housing finance data, both of which set records for growth in December.

“With this in mind, it is likely that we have not yet seen the peak of detached home building approvals,” she said.

While approvals for private houses increased by 15.8 per cent over the month, other types of dwellings saw only meagre growth of 2.3 per cent. In particular, apartments are expected to struggle for the foreseeable future.

“Not only does the apartment market face headwinds from a lack of population growth and a preference for detached houses, yesterday’s regional migration data shows a shift away from metropolitan Sydney and Melbourne,” said Lillicrap.

“The apartment market is also likely to be constrained until overseas migration returns.”

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