Building approvals dropped back in March following two strong months in January and February, new data shows.

On a seasonally adjusted basis, data from the Australian Bureau of Statistics indicates that the number of dwellings that were approved for construction throughout Australia fell by 8.8 percent in March to come in at 15,220.

Driving the decline was a 15.4 percent drop in the statistically volatile multi-unit sector (units, townhouses and apartments).

Approvals in the sector dropped back following two strong months which occurred on account of spikes in numbers that were observed in New South Wales and Victoria in January and February respectively.

However, approvals also dropped by 4.4 percent in the more statistically stable detached house sector.

This was led by falls of 10 percent in Victoria and 8 percent in Queensland – the latter of which was impacted by Cyclone Alfred during the month.

Despite the fall in March, data over the longer term indicates a strengthening trend in multi-unit approvals which has taken hold since the middle of last year (see chart below).

In detached housing, however, approvals have eased over the past six months.

In terms of states, momentum is stronger in Western Australia, South Australia and Queensland but subdued in NSW and Victoria (see chart).

The latest data also highlights challenges in delivering the national housing target of 1.2 million new homes over the five years from 1 July 2024 under the National Housing Accord.

To achieve this, the nation would need to deliver 20,000 new homes per month – well above the 15,220 dwellings that were approved in March.

Adding to this, Col Dutton, National President of the Urban Development Institute of Australia (UDIA Australia), talks of an ‘attrition rate’ for delivering new housing from the original approvals of around 10 percent.

This means that approvals would need to sit at around 22.000 each month in order for the nation to maintain a delivery rate of 20,000 new homes per months as per the accord.

Dutton called on policy makers to act.

“We need to remove all impediments slowing down housing delivery, with a key factor being enabling infrastructure, the water, power, sewer and roads that must be in place to give certainty to supply for development of housing,” he said.

“These numbers show how much work is required by the newly re-elected.

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