Market confidence appears to be returning to the home building market, with an increase in residential building approvals in July, according to HIA Economist Maurice Tapang. Source: Timberbiz
The Australian Bureau of Statistics this week released its monthly building approvals data for July 2024 for detached houses and multi-units covering all states and territories.
Residential building approvals rose by 10.4 per cent in July, with a 0.3 per cent rise in approvals for detached houses and a 33.7 per cent rise in multi-unit approvals.
Nationally, there were 9,350 detached homes approved for construction in July 2024 and 5,440 multi-unit approvals.
“The small increase in detached home approvals is being driven by what appears to be sustained improvements in Western Australia, Queensland and South Australia, while New South Wales and Victoria remain more constrained,” Mr Tapang said.
“The strong improvement in the number of multi-unit approvals comes off the weakest month for multi-units in 12 years.”
House approvals over the three months to July 2024 were 2.3 per cent higher compared with the previous three-month period, to be 12.6 per cent higher compared to the same time in the previous year.
Across the capital cities, house approvals in the three months to July rose by 19.8 per cent in Perth compared with the previous three-month period, with Adelaide recording an increase of 13.7 per cent and Brisbane an increase of 10.6 per cent.
The two largest capital cities recorded more modest increases in house approvals, with Sydney up by 2.8 per cent compared to the previous three-month period and Melbourne up by 2.0 per cent.
“The uplift in home building approvals in those markets outside of Sydney and Melbourne has been driven by strong economic conditions and the relatively lower cost of delivering a new home,” Mr Tapang said.
“It has been almost ten months since the last increase in the cash rate. Stable interest rate settings have provided the certainty needed to see a rise in home building confidence.
“Materials price growth and build times for homes have stabilised and returned to normal pre-pandemic levels, which provides certainty with the cost to build,” he said.
“Unemployment remains very low, and there are now more people employed in the economy than there were prior to the pandemic.
“There is strong demand for homes and a low level of supply, as evidenced by low rental vacancy rates particularly outside of Australia’s southeastern capitals.
“Policymakers that ease the tax and regulatory burdens on new homes will also help in lowering the cost of delivering a completed home to market,” Mr Tapang said.
Master Builders Australia CEO Denita Wawn said that July marked the first month of the new National Housing Accord, which seeks to deliver 1.2 million new homes by June 2029.
“(The) figures show that we have started the Accord on the front foot,” she said.
“However, it will still be a huge challenge for us to deliver the Accord’s target.
“Over the past five years, just 940,000 new homes were approved across Australia.
“More ominous is the fact that 166,140 new home building approvals were received over the year to July,” Ms Wawn said.
“If we remain at this pace, we’re looking at creating about 831,000 new homes over the next five years.
“We cannot take the foot off the peddle when it comes to boosting housing supply and improving the investment environment for new projects.
“Workforce shortages, woeful industry productivity, a lack of critical infrastructure, high taxes and charges, slow approval process, and costly union Enterprise Bargaining Agreements all inhibit the building and construction industry’s capacity to get on with the job,” Ms Wawn said.
House approvals over the three months to July 2024 increased by 57.6 per cent in Western Australia compared to the same time in the previous year. This was followed by Queensland (+22.1 per cent), Victoria (+8.8 per cent) and South Australia (+4.4 per cent). The other jurisdictions recorded a decline over the same period, led by Tasmania (-19.3 per cent), the Australian Capital Territory (-12.4 per cent), the Northern Territory (-8.2 per cent) and New South Wales (-4.7 per cent).
