Record breaking home approvals largely driven by Western Australia: HIA

The Australian Bureau of Statistics’ dwelling approvals figures recorded an increase in July for new dwellings, with the Housing Industry Association (HIA) noting that this is high by historical standards.

In July, 16,320 dwellings were approved, which was a 2.5% increase on June.

HIA senior economist Shane Garrett said that this is another record broken, with total seasonally adjusted new home approvals over the past 12 months at the highest since records began in 1984.

“Having broken through the 195,000 threshold for the first time, new home building approvals is now at an even higher level than during the 1994 building boom,” he said.

However, over the past six months there have been signs of a slowdown.

Western Australia: 23.1%
South Australia: -1.9%
ACT: -9.3%
Northern Territory: 16.7%
New South Wales: -5.7%
Victoria: -4.6%
Tasmania: -7.7%
Queensland: 0.9%

“It is also worth bearing in mind that the bulk of the July increase was driven by an exceptional large expansion in Western Australia,” Garrett warned.

“The key is to ensure that a number of markets, like Sydney for example, achieve sustainably healthy levels of new home over the coming decade which far outweigh what has been built over the last ten years. Numerous government policies across all tiers stand in the way of this objective being achieved.”

The increase in Western Australia was 23.1% in seasonally adjusted terms, while a slight increase was also seen in Queensland at 0.9%. However, significant declines were seen for new dwelling approvals in Tasmania, with a 7.7% drop, New South Wales, down 5.7% and Victoria, which recorded a 4.6% slump.

Western Australia’s significant increase comes after a six month period of little growth.

South Australia’s 1.9% drop was mild in comparison, particularly compared to the ACT’s 9.3% decline. Meanwhile the Northern Territory recorded a 16.7% surge.

Master Builders Australia’s chief economist Peter Jones also called it an easing off of the “red hot upswing in approvals for apartments”.

Detached houses were noted as taking over as the key driver of growth, following some moderation in the recent upswing of approvals for units.

Western Australia’s significant increase comes after a six month period of little growth.

“In annual terms, approvals for private sector houses increased by 14% seasonally adjusted through to July while approvals for apartments were up by a more restrained 6.3% seasonally adjusted,” he said.

“Indeed residential building recovery appears on track for an extended upturn given the underlying favourable dynamics of low interest rates, strong population growth and a deficiency of stock due to previous underbuilding.”