Tag: Building Approvals

According to the ABS, in data released today, the number of dwellings approved fell 1.7 per cent in May 2014, in trend terms, and has fallen for five months.  However, the seasonally adjusted estimate for total dwellings approved rose 9.9% in May after falling for three months. Approvals for units increased. The seasonally adjusted estimate for private sector dwellings excluding houses rose 27.2% in May after falling for three months.  The seasonally adjusted estimate for private sector houses rose 0.5% in May after falling for three months.

Dwelling approvals increased in trend terms in the Northern Territory (8.2 per cent) and Tasmania (6.5 per cent). Dwelling approvals decreased in trend terms in the Australian Capital Territory (9.5 per cent), Queensland (3.2 per cent), New South Wales (3.0 per cent), South Australia (1.6 per cent), Western Australia (0.5 per cent) and Victoria (0.2 per cent). In trend terms, approvals for private sector houses fell 0.2 per cent in May. Private sector house approvals rose in Queensland (0.3 per cent), Victoria (0.2 per cent) and Western Australia (0.2 per cent). In trend terms, approvals for private sector houses fell in New South Wales (2.1 per cent) and South Australia (0.6 per cent).

The value of total building approved fell 3.3 per cent in May, in trend terms, and has fallen for six months. The value of residential building fell 1.1 per cent, while non-residential building fell 7.6 per cent in trend terms.

However, the seasonally adjusted estimate of the value of total building approved rose 26.1% in May after falling for four months. The value of residential building rose 13.5% after falling for three months. The value of non-residential building rose 59.5% after falling for four months.

So depending on your point of view, building approvals are either up or down in May! DFA’s view is that the seasonally adjusted data is probably a better read, indicating that the effects of low interest rates and the demand for property in a rising price market is stimulating approvals.

The ABS released the building approvals data for April 2014. They report that the trend estimate for total dwellings approved fell 1.6% in April and has fallen for four months.  The seasonally adjusted estimate for total dwellings approved fell 5.6% in April and has fallen for three months. Looking at private sector houses, whilst the trend estimate for private sector houses approved rose 0.5% in April and has risen for 16 months, the seasonally adjusted estimate for private sector houses fell 0.3% in April and has fallen for three months. The trend estimate for private sector dwellings excluding houses fell 4.6% in April and has fallen for five months. The seasonally adjusted estimate for private sector dwellings excluding houses fell 14.0% in April and has fallen for three months.

Here is the national seasonally adjusted trend for all units and houses across Australia. Note recent fall in the number of units, and the sustained growth in houses nationally.

The trend estimate of the value of total building approved fell 5.6% in April and has fallen for five months. The value of residential building fell 1.8% and has fallen for four months. The value of non-residential building fell 12.8% and has fallen for five months. The seasonally adjusted estimate of the value of total building approved fell 17.4% in April and has fallen for four months. The value of residential building fell 7.4% and has fallen for two months. The value of non-residential building fell 36.6% and has fallen for four months.

Looking at the state data, we see some interesting variations.

In NSW there was drop last month in unit approvals, having seen run-away growth in the past year. The number of house approvals also fell slightly. But overall, more units and high density housing was approved than houses, reflecting investment demand and affordability issues.

In VIC house approvals is on the rise, and is still outpacing unit approvals.

In QLD, unit approvals have fallen away, an house approvals are down slightly.

In SA, house approvals are way ahead of unit approvals, though we see a slight fall in house approvals recently, and a slight rise in units.

Finally, in WA, we see growth in house approvals in recent months, but a turn down recently. Units are up slightly, but are significantly below housing approvals.

Overall then, with approvals down, we wonder about momentum in the property market. Maybe the demand supply gap is getting bigger. To meet the demand for property, and to help ease prices, we need greater supply. We estimate that over the next three years we will need more than 900,000 new properties to meet demand