Detached house approvals continue to be elevated compared with pre-COVID levels with new work entering the pipeline to keep builders busy throughout 2023, according to the Housing Industry Association. Source: Timberbiz
Detached house approvals increased by 1.4% in the three months to April 2022 to be 16.8 per cent higher than the same three months in 2019. Renovations activity also remains elevated. The value of renovations approvals jumped by 6.6% in April to be up over the last 18 months by 42.6% on pre-pandemic levels.
“At the end of 2021, there were 75.7% more detached homes under construction than pre-COVID. There are now more homes approved and waiting commencement than in any previous cycle,” HIA economist Tom Devitt said.
“Together with similar new home building and renovations booms in other developed economies, this has placed significant demands on the international supply of building materials, along with local supplies of land and labour. This has combined to create ongoing increases in the cost of construction.
“This will sustain Australia’s elevated number of homes and renovations under construction and keep Australia’s already-stretched home builders busy until at least June 2023,” he said.
“It will also delay the adverse impact of rising rates on the industry, and therefore the wider economy.”
Multi-unit approvals increased by 7.4% in the three months to April 2022.
Mr Devitt said an acute rental shortage and deterioration in affordability had seen strengthening demand for multi-units, including high rise apartments.
He said there are early signs that overseas migrants – who tend to favour higher density living – were returning. These factors would support demand for multi-unit construction.
“With detached home building and renovations activity remaining at capacity until at least June 2023 and demand for multi-units returning, the shortage of building materials and labour will continue to be the main pinch point for the industry,” Mr Devitt said.
In seasonally adjusted terms, total residential building approvals increased in the last three months compared to the previous quarter in Victoria (+9.9%), New South Wales (+8.6%) and South Australia (+4.3%\. Declines were seen in Queensland (-4.5%), Western Australia (-9.8%) and Tasmania (-17.1%). In original terms, approvals increased in the Northern Territory (+115.2%) but declined in the Australian Capital Territory (-5.2%).
