Tag: Building Approvals

The ABS released their building approvals data for December 2014 today. Another strong result, especially in the unit sector.

ABS Building Approvals show that the number of dwellings approved rose 1.3 per cent in December 2014, in trend terms, and has risen for seven months. the total number of new homes approved in December 2014. This is 3.3 per cent below the record reached in November, although still 8.8 per cent higher than in December 2013.

Dwelling approvals increased in December in Tasmania (4.8 per cent), New South Wales (3.2 per cent), Western Australia (0.9 per cent), Queensland (0.8 per cent), Victoria (0.6 per cent) and South Australia (0.2 per cent) but decreased in the Australian Capital Territory (2.5 per cent) and the Northern Territory (1.9 per cent) in trend terms.

In trend terms, approvals for private sector houses fell 0.2 per cent in December. Private sector house approvals rose in Victoria (0.5 per cent) but fell in New South Wales (1.4 per cent), Western Australia (0.5 per cent), South Australia (0.4 per cent) and Queensland (0.1 per cent). There are significant state variations, with WA building relatively less units that VIC and NSW as a proportion of all approvals. Nearly 60% of approvals in NSW were for units.  However, nationally, detached house approvals are overall quite consistent at around 9,500 approvals per month. The chart below shows the percentage mix by state of houses to all approvals.

The value of total building approved rose 0.2 per cent in December, in trend terms, after falling for four months. The value of residential building rose 0.6 per cent while non-residential building fell 0.7 per cent in trend terms.

 

The ABS released their Building Approvals Data to October 2014.  The trend estimate for total dwellings approved rose 0.6% in October and has risen for five months whilst the seasonally adjusted estimate for total dwellings approved rose 11.4% in October following a fall of 11.2% in the previous month.

The trend estimate for private sector houses approved was flat in October whilst the seasonally adjusted estimate for private sector houses fell 0.2% in October and has fallen for two months. The trend estimate for private sector dwellings excluding houses rose 1.6% in October and has risen for five months whilst the seasonally adjusted estimate for private sector dwellings excluding houses rose 31.3% in October following a fall of 24.5% in the previous month.  The volatile unit sector is of course influenced by high demand for investment property.

The trend estimate of the value of total building approved fell 1.2% in October and has fallen for 11 months whilst the value of residential building fell 1.1% and has fallen for four months. The value of non-residential building fell 1.3% and has fallen for 11 months. The seasonally adjusted estimate of the value of total building approved rose 0.2% in October following a fall of 10.0% in the previous month. The value of residential building rose 8.0% following a fall of 16.3% in the previous month. The value of non-residential building fell 14.1% following a rise of 4.7% in the previous month.

We wonder about the accuracy of the seasonally adjusted data, which appears to be moving significantly month by month. ABS states that:

seasonal adjustment is a means of removing the estimated effects of seasonal and calendar related variation from a series so that the effects of other influences can be more clearly recognised. It does not remove the effect of irregular or other influences (e.g. the approval of large projects or a change in the administrative arrangements of approving authorities). State/territory series are seasonally adjusted independently of the Australian series. In general, the sum of the state/territory estimates are reconciled to equal the Australian total estimates. Seasonally adjusted estimates are produced by a seasonal adjustment method which takes account of the latest available original estimates. A detailed review of seasonal factors is conducted annually, generally prior to the release of data for May. Trend estimates are created by smoothing seasonally adjusted series to reduce the impact of the irregular component of the seasonally adjusted series. Abnormally high or low values (outliers) are discounted or excluded from the trend estimates.

That said, the low interest rate environment does appear to be flowing through into construction, as the RBA hoped.

ABS Building Approvals show that the number of dwellings approved were flat in September 2014, in trend terms, holding steady for the last two months. Approvals of house dwellings has been declining slowly in trend terms for the last 6 months. The seasonally adjusted estimate for total dwellings approved fell 11.0% in September after rising for two months.

Dwelling approvals increased in September in the Australian Capital Territory (4.0 per cent), South Australia (1.3 per cent), Western Australia (0.9 per cent) and Queensland (0.7 per cent), but decreased in Tasmania (5.1 per cent), the Northern Territory (1.7 per cent), New South Wales (1.0 per cent) and Victoria (0.6 per cent) in trend terms.

In trend terms, approvals for private sector houses fell 0.2 per cent in September. Private sector house approvals fell in Victoria (1.8 per cent), South Australia (0.7 per cent) and Western Australia (0.3 per cent), but rose in Queensland (1.7 per cent) and New South Wales (0.9 per cent). The seasonally adjusted estimate for private sector houses fell 2.3% in September and has fallen for two months.

The value of total building approved rose 0.1 per cent in September, in trend terms, following a fall of 0.2 per cent in the previous month. The value of residential building fell 0.6 per cent and the value of non-residential building rose 1.4 per cent in trend terms. The seasonally adjusted estimate of the value of total building approved fell 9.5% in September following a rise of 1.9% in the previous month. The value of residential building fell 16.1% following a rise of 5.5% in the previous month. The value of non-residential building rose 5.3% after falling for two months.

The ABS released their Building Approvals data series today to July 2014. The seasonally adjusted figures show a lift on the previous month, although the original data shows a slight fall. The trend estimate for total dwellings approved fell 0.5% in July and has fallen for seven months, however the seasonally adjusted estimate for total dwellings approved rose 2.5% in July following a fall of 3.8% in the previous month.

The trend estimate for private sector houses approved fell 0.2% in July after being flat in the previous month. The seasonally adjusted estimate for private sector houses rose 1.4% in July following a fall of 1.0% in the previous month. The trend estimate for private sector dwellings excluding houses fell 1.0% in July and has fallen for eight months. The seasonally adjusted estimate for private sector dwellings excluding houses rose 5.9% in July following a fall of 9.4% in the previous month. The mix between units and houses continues the trend, which commenced in 2009, where we see more units being approved. As we commented previously, this reflects the impact of high prices and strong demand, especially for investment property.

Turning to the value of building approvals,  the value of residential building rose 0.2% and has risen for two months. However, the seasonally adjusted estimate of the value of residential building rose 0.8% following a fall of 3.2% in the previous month. In comparison, the value of non-residential building fell 26.5% after rising for two months.