Building approvals data has begun to reflect COVID-19 shock, according to the Housing Industry Association. Building approvals in May fell by 16.4% nationally as the impact of COVID-19 restrictions impeded the flow of new building projects to be undertaken according to HIA economist Angela Lillicrap. Source: Timberbiz
“The decline in approvals in May was widespread with all states experiencing a contraction in approvals. This is the first ABS housing data that reflects the impact of COVID-19 on home building,” she said.
“The decline in approvals in May is only the start of the COVID-19 shock in home building. We anticipate building approvals data will continue to decline for a number of months, due to the lag in the approvals process.’’
Ms Lillicrap said that economic uncertainty in the months prior to May were a significant factor leading to the decline in approvals in May. HIA new home sales in the preceding months had fallen dramatically and slower processing times due to staffing constraints within councils may also have played a role.
“This decline in approvals would typically impact work on the ground in the second half of the year,’’ Ms Lillicrap said.
“HomeBuilder and an easing of restrictions should assist in bringing consumers who delayed their purchasing decisions back to the market and minimise the adverse impact of the COVID-19 shock on employment in the sector, but this will not be reflected in ABS data for some months,” she said.
“Detached house approvals fell by only 4.1% in the month. We expect this is just the start of the decline in approvals.
“Multi-unit approvals fell by 34.5% to an 8-year low. This sector faces very difficult market conditions due to the decline in student numbers and halt in migration. In addition, HomeBuilder is unlikely to have a significant impact on this part of the market.”
In seasonally adjusted terms, building approvals for May 2020 quarter declined in Tasmania (-23.3%), Victoria (-14.3%), New South Wales (-11.3%), South Australia (-9.3%), Western Australia (-8.9%) and Queensland (-7.4%).
