Apartment Approvals Decline Drives End-of-Year Slump

Home approvals slumped in December, rounding out the worst annual decline in more than a decade.

According to data from the Australian Bureau of Statistics (ABS), the total number of homes approved fell 9.5 per cent in the last month of 2023 (seasonally adjusted), after a 0.3 per cent rise in November.

For the year, home approvals in 2023 were 19 per cent lower than in 2022.

ABS head of construction statistics Daniel Rossi said approvals for private-sector homes excluding houses—apartments, townhouses and the like—drove the December decline, falling 25.3 per cent.

“In 2023, there were 59,174 private other homes approved, compared to 73,041 in 2022.

“Approvals in the less volatile private house sector fell 0.5 per cent in December.”

Total home approvals fell in Victoria (18.4 per cent), South Australia (11.8 per cent), and Tasmania (2.7 per cent).

Meanwhile, Queensland (8.2 per cent), Western Australia (7.9 per cent), and New South Wales (2.0 per cent) rose. 

Approvals for private sector houses were driven lower by South Australia (-5.3 per cent), NSW (-2.6 per cent), and Queensland (-0.4 per cent), while there were rises in Western Australia (2.2 per cent) and Victoria (1.2 per cent) in December. 

The value of total building approved fell 6.4 per cent after a 10.4 per cent drop in November.

Homes approved, states and territories, seasonally adjusted

▲ Source: ABS

Total residential building values dropped 3.7 per cent—new residential buildings declined 3.8 per cent and there was a 2.8 per cent fall in alterations and additions. 

The value of non-residential building fell 10.6 per cent after a 19.8 per cent drop in November.

Oxford Economics Australia senior economist Maree Kilroy, said the level of annual decline of approvals in 2023 was the softest since 2012.

“There remains a significant pipeline of residential construction work not yet done which we expect will finally materialise, seeing an increased volume of homes being completed over the next six months,” she said.

“While this will provide a boost to near-term supply, the trajectory of home approvals points firmly to a softer 2025 for completions.

“Compounded by record levels of migration, Australia’s housing undersupply is expected to persist for several years.”