Building approval rates for homes other than detached houses plummeted an eye-watering 43.5 per cent nationally in July, according to the latest data from the ABS.
The ABS’s raw data recorded just 893 approvals for high-density construction.
Total building approvals dropped by 17.2 per cent nationally while the approval rate for houses increased by just 0.7 per cent in July.
BIS Oxford Economics property and building forecasting head Timothy Hibbert said the high-density construction figure was the lowest it had been since February, 2010.
“It is a segment that is prone to quite a bit of volatility but I don’t 100 per cent know how to explain the weakness,” Hibbert said.
“We know that it is partly construction not being able to source staff during the pandemic, and the rush for space being much more concentrated for detached homes on the fringes of Australia’s major cities and in regional Australia.
“On the apartment side, there are positives in play as well.
“We do have build-to-rent providing increased levels of support and we have positive upwards inroads for social housing, especially concentrated in Victoria.”
There was also a drop across all categories year-on-year with all housing types down by 25.9 per cent, houses down by 17.4 per cent and other housing types down by 43 per cent, according to the ABS’ seasonally adjusted figures.
South Australia had the largest increase in total housing approvals of the states at 19.2 per cent while Western Australia had the greatest decline, falling by 36.9 per cent..
The data also shows that across detached house approvals, South Australia had the largest increase with 18.6 per cent and Western Australia the largest decrease, 8.7 per cent.
Hibbert said South Australia has long been a standout during the pandemic.
“During the 15 years prior to the pandemic, we saw a net outflow of people from the state,” Hibbert said.
“We are now seeing those people choosing to come back, with more money, and to a place that is more affordable.”
Hibbert said the Western Australian story was different.
“They don’t have enough tradies,” Hibbert said.
“They have the most building cost inflation, construction timelines are blown out and so it is less attractive to build new there.
“It is also a state that had the biggest influx to stimulus.
“That provided an outside surge from a low base for the state and it has probably created a bit more of a hangover that’s still enduring—the latest numbers support that.”
Building approvals data, July 2022
| State/Territory | Private sector houses (no.) | Private sector houses: monthly change (%) | Total unit approvals (no.) | Total unit approvals: monthly change (%) |
| New South Wales | 2215 | -6.3 | 3571 | -16.2 |
| Victoria | 3208 | 1.5 | 4236 | -17.4 |
| Queensland | 2054 | 5.8 | 2837 | -13.7 |
| South Australia | 949 | 18.6 | 1149 | 19.2 |
| Western Australia | 1099 | -8.7 | 1204 | -36.9 |
| Tasmania | N/A | N/A | 260 | -14.5 |
| Northern Territory | N/A | N/A | N/A | N/A |
| Australian Capital Territory | N/A | N/A | N/A | N/A |
| Nationally | 9937 | 0.7 | 13595 | -17.2 |
^Source: Building Approvals Australia, July 2022, ABS
Victoria experienced a 1.5 per cent increase in house approvals while New South Wales approvals declined 6.3 per cent.
Hibbert said greenfield sales may have accounted for part of the increase in house approvals.
Melbourne and Geelong’s sales have recently slowed after a massive spike earlier in the year even though lot prices keep growing.
“It is important not to overread,” Hibbert said.
“We will continue to see borrowing and build costs impact the process going into 2023.”
In the previous month’s data, Western Australia had the biggest increase in approvals for houses at 1.1 per cent and New South Wales the biggest drop by 1.2 per cent.
The Northern Territory fared the worst for total home approvals by 5.9 per cent and Western Australia was up 5.5 per cent.
Total home approvals across Australia in June remained steady after a 0.5 per cent drop in May.
