A rebound in the multi-residential sector in Queensland and New South Wales has driven building approvals in Australia back to near sky-high levels seen earlier in the year.
On a seasonally adjusted basis, the number of houses and apartments approved for construction throughout the country rose by 9.9 percent in the month of May to come in at 16,425, according to the latest data from the Australian Bureau of Statistics – a level which if maintained for twelve consecutive months would imply an annualised building rate of more than 197,000 homes even though the nation has built more than 180,000 homes in a single calendar year only once in the past three decades.
Whilst the latest result was driven by a 27.2 percent surge in the statistically volatile multi-residential sector (detached houses edged up 0.5 percent) and activity is not expected to be sustained at quite this level, building industry observers welcomed the data.
“The nearly 10 per cent, seasonally adjusted, rise in the latest Building Approvals shows that the building and construction industry is well placed to be the major engine of growth and jobs as the economy adjusts to the decline in engineering construction in the mining sector,” Master Builders Australia Chief Executive Office Wilhelm Harnisch said, adding that a 9.6 percent surge in previously weak Tasmania was encouraging but cautioning about the more modest result in detached housing and the patchy nature of the recovery across geographic regions.
“The 9.9 per cent, seasonally adjusted, rise in Building Approvals for May, reflects the continuing strength of demand for units and apartments.
“This reflects confidence in the industry and will provide a pipeline of work for up to the next three years”.
Housing Industry Association Economist Geordan Murray agrees.
“The three consecutive months of declining approval numbers following the peak in January this year had caused some observers to start questioning the longevity of the home building recovery,” Murray said.
“This result gives us confidence that the recovery has a way to run yet.”
In terms of states, Queensland, New South Wales, Tasmania and the Northern Territory led the way, with approvals rising 45.0 percent, 18.7 percent, 9.8 percent and 9.6 percent in seasonally adjusted terms (or, in the case of the ACT, trend terms) in these states respectively.
Approvals also edged up 0.4 percent in Western Australia but dropped 9.6 percent, 8.5 percent and 6.7 percent in the Australian Capital Territory (trend terms) and Victoria and South Australia (seasonally adjusted terms).