Residential building approvals have picked up for the first time in 18 months, exceeding market expectations.
Despite a month-on-month fall in numbers last year, building approvals have recorded a mild upswing of 2.1 per cent in the year to December 2019, according to the latest data released by Australian Bureau of Statistics.
While still 19.1 per cent lower than the previous year, the stronger-than-anticipated figures saw both houses and attached dwellings—townhouses and apartments—holding steady on the previous month’s result.
“The trend for the total dwelling approvals series continued to rise at the end of 2019," ABS director of construction statistics Daniel Rossi said.
December’s increase was driven by a rise of 4.9 per cent in the “other dwellings” category that includes townhouses and apartments. Private sector house approvals were up by 0.3 per cent.
Most states and territories saw a rise in dwelling approvals, most notably Victoria, where apartment approvals surged to 6.1 per cent, providing the biggest boost to the national result. The Northern Territory rose 4.7 per cent, Australian Capital Territory one per cent, with both New South Wales and South Australia up by 0.5 per cent.
Approvals for private sector houses increased in Western Australia by 2.0 per cent, Victoria 1.1 per cent, Queensland 1.1 per cent and South Australia 0.5 per cent but fell 2.1 per cent in New South Wales in trend terms.
BIS Oxford Economics economist Maree Kilroy pointed out that all states and territories are expected to see growth over the next 12 months, driven mostly by the house and medium density segments of the market.
“Looking ahead, the positive momentum that has developed in the established property market and the flow through of a range of stimulus measures to new dwelling demand sets the scene for a recovery in approvals over 2020,” Kilroy said.
Despite the challenges presented to the residential home building industry by factors including the credit squeeze and a temporary slump in house prices, HIA economist Angela Lillicrap says that the market’s improvement in the final months of 2019 suggests new home building has stabilised at relatively strong levels.
“Continued growth in house prices will assist in bringing investors back to the market as well as support an increase in activity across the broader economy,” Lillicrap said.
The latest approvals figures and the continued turnaround in Australia's housing markets come as the RBA decided to leave the cash rate unchanged on Tuesday, amid a number of unusual economic influences set to temporarily impact domestic growth, including the recent bushfires and the Coronavirus outbreak.
“There are continuing signs of a pick-up in established housing markets,” governor Philip Lowe said.