According to the HIA’s Chief Economist Tim Reardon building approvals for detached houses declined again in February, consistent with the trend of the past year. The Australian Bureau of Statistics has released its monthly building approvals data for Australia and the states and territories. Source: Timberbiz
“Detached house approvals fell by 3.7% for the month to be 11.1% lower than the same three-month period last year,” Mr Reardon said.
“This is consistent with our expectation that this downturn will be sharp and shallow with detached building activity remaining above the long-term average at the bottom of this downturn.
“In contrast, multi-unit approvals unexpectedly jumped by 62.4% in the month, against a backdrop of very low volumes of approvals in the second half of 2018. This bounce was due to a 134.1% increase in multi-unit approvals in Victoria. NSW also experienced an exceptional bounce back for multi-unit approvals of 69.5%.
“Despite the surge in multi-units approvals, they remain 32.9% lower than the same three month period last year. There remains a significant volume of multi-unit construction in the pipeline this year.
Mr Reardon said that the market had cooled in the second half of 2018 on the back of the credit squeeze as dwelling prices corrected, adversely impacting market confidence.
“These results are an encouraging sign that this downturn will remain modest relative to historical comparisons,” he said.
Gains in seasonally adjusted dwelling approvals in February 2019 were led by Victoria (+37.3%) and NSW (+25.2%), followed by SA (+6.8%) and Queensland (+3.4%). All other states declined: WA (-10.9%) and Tasmania (-13.6%). Trend data in ACT (-6.3%) and NT (-6.5%) also showed declines.
Master Builders Australia has welcomed the announcement of Labor’s Build to Rent tax concessions that will encourage institutional investment in housing and boost residential building activity
“However, Labor’s announcement that its increase of capital gains tax and restrictions on negative gearing will start from 1 January 2020 does nothing to allay concerns about the impact on building activity and the housing supply,” Denita Wawn, CEO of Master Builders Australia said.
“Our modelling that shows Labor’s policy will reduce the number of new homes by up to 42,000 and deprive the economy of up to $11.8 billion worth of building activity,” Ms Wawn said.
“Master Builders Forecasts tell us that we need 62,000 new homes built each year to meet the community’s demand for housing.
“We need all incentives for investment on the table rather than taking away incentives from one part of the market to prop up another.”
