In a positive sign for the building industry in Australia, the number of new homes approved for construction surged in July amid a spike in multi-residential approvals.
In what comes as somewhat of a surprise, the latest figures from the Australian Bureau of Statistics (ABS) also show construction industry profits hitting all-time quarterly highs – albeit with that figure subject to some question in a generally subdued business environment.
Following two months of significant declines, the seasonally adjusted number of dwelling units approved for construction throughout Australia jumped 10.8 per cent in July to come in at 14,304, the latest ABS figures indicate.
While most of the increase reflected a 24.4 per cent surge in the statistically volatile multi-residential sector, the more stable stand-alone housing sector registered a more than respectable 3.9 per cent rise.
Indeed, at 8,451 (seasonally adjusted), stand-alone housing approvals are now at their highest level since February 2011 and have risen during six of the past eight months, though some of the resurgence has come at the expense of a generally more subdued multi-residential sector.
Tasmania and Victoria led the way, recording seasonally adjusted gains of 24.7 per cent and 22.2 per cent respectively, while the ACT recorded a 12.6 per cent gain (trend terms) and Western Australia, South Australia and Northern Territory recorded gains of 9.8 per cent, 9.7 per cent and four per cent respectively.
Approvals fell by 6.7 per cent in New South Wales and four per cent in Queensland, however.
Building groups welcomed the latest figures.
“Following on from June’s disappointing figures, the results for July indicate that the prevailing trend in the sector is one of recovery,” HIA Ssnior economist Shane Garrett said. “The general trend of improvement in residential construction is proof positive that the RBA’s rate cuts are slowly fostering expansion in parts of the housing industry. We look forward to further movement on rates in the coming months.”
Master Builders Australia chief economist Peter Jones describes the latest data as a positive sign that a sustained recovery may be taking hold but cautioned approvals remain well below levels sufficient to meet long-term housing needs.
The latest figures come as other ABS data shows a surprise jump in construction industry profits.
All told, businesses throughout the industry raked in a record $6.832 billion in gross operating profit (excluding, interest, tax, depreciation, amortisation and specific one-off charges) in the June quarter, the figures indicate – up by just over a quarter year-on-year.
That figure, however, should be treated with caution as other data shows rising costs and falling selling prices as well as generally poor profit results in the most recent profit reporting season from construction-related firms listed on the Australian Stock Exchange.