Last year records highest ever number of dwelling approvals

Last year records highest ever number of dwelling approvals
Last year records highest ever number of dwelling approvals

Over the past 12 months a total of 197,571 dwellings have been approved - the highest on record.

In August, dwelling approvals increased by 3%, according to the Australian Bureau of Statistics, with the yearly result up 14.5%.

CommSec economist Savanth Sebastian said that the latest economic data, in particular this lift in dwelling approvals, is encouraging.

"Dwelling approvals rose for the second straight month in August and hit record highs when viewed over the past 12 months. At the same time the trade deficit narrowed," he noted, saying that the fact approvals have consolidated over the last few months is positioning housing activity to be the "backbone of Australia's growth story over the coming year".

Dwelling approvals are now 24% above decade averages, and Sebastian expects them to lift even further over the second half of 2014.

"Lower interest rates, strong population growth, improving affordability, and pent up housing demand will see the housing sector gather pace over the medium term. In addition the recent cuts to fixed interest rates by the major banks will spur a further round of home building," he explained.

The approvals list will also appease policymakers, with an expectation than a lift in new housing stock would ensure more sedated price growth over the longer term as it shifts the supply/demand dynamic.

ANZ Research noted that dwelling approvals' increase was reflective of higher home prices and improved developer and home buyer sentiment, with strength in multi-dwelling units driving the result with 9.2% month on month growth.

House approvals fell 1.4% month on month.

"Looking through the volatility, higher-density approvals have been trending higher again in recent months, having previously reached a cyclical peak in late 2013 and then easing modestly. Meanwhile, the trend in house approvals continues to flatline, although remains at elevated levels," their latest research notes.

A solid pipeline of planning housing construction is expected, particularly for high rise apartments in Sydney, Melbourne and Brisbane.

The total value of non-residential building approvals did trend lower in August, now down 24% over the year, particularly in the commercial property sector.

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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Construction

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