Residential building approvals in Australia only eased slightly in October after hitting their highest level in three and a half years in September, according to the latest figures from the Australian Bureau of Statistics.
Overall, looking beyond just one month’s figures, the upward momentum in the building approvals sector is impressive and means the industry is poised for more growth in 2014, according to the Housing Industry Association, the voice of Australia’s residential building industry.
In October 2013, growth in total seasonally adjusted building approvals was strongest in Victoria with growth of 23.4%, followed by Tasmania up 19.7%, Queensland up 10.5% and South Australia up 1.2%.
But approvals dropped by 33.5% in New South Wales and fell by 6% in Western Australia. In trend terms, building approvals rose by 13.4% in the Northern Territory but fell by 4.7% in the Australian Capital Territory.
‘All things considered, this is a healthy update for this key leading indicator of new home building activity. After a modest decline of 1.8% in October, total residential building approvals are still at their second highest level since March 2010,’ said HIA chief economist Harley Dale.
He pointed out that there were wide variances in the October approvals results, including strong growth in Victoria and Queensland helping to offset a dip in New South Wales.
But looking beyond just one month, the fastest growth in approvals is occurring for New South Wales, Victoria and Queensland, while growth in ‘other dwelling’ approvals, at 43% of total approvals in 2013, is far outpacing that for detached houses.
‘The upward momentum to building approvals is impressive and augers well for new home building activity heading into a new year. Evidence of faster growth across a wider number of geographical jurisdictions and building approval types will be an important additional element to observe in coming months,’ explained Dale.
He also pointed out that in the decades ahead Australia will need to build a considerably higher number of homes per annum than it has averaged over the last 20 years.
‘Current momentum suggests we are taking a big first step in this regard. But we won’t make the final destination without a concerted focus on reducing the structural barriers to a sustainable lift in new housing supply. With a first round new home building recovery underway, now is the time to embark on that programme of policy reform,’ he added.