The market for new housing construction has rebounded slightly as the HomeBuilder Grant spurred demand for new homes, according to the latest building approval data from the Australian Bureau of Statistics (ABS).

On a seasonally adjusted basis, the number of dwellings approved for construction during the month of July increased by 12 percent to come in at 13,840, the data shows.

Leading the charge was the statistically volatile multi-unit sector, where approvals jumped by 22.7 percent to come in at 4,684 but remains at subdued levels compared with recent years.

Even in the more statistically stable detached house segment, however, approvals jumped 8.5 percent to come in at 8,852.

Across states and territories, dwelling approvals rose in Tasmania (50.0 per cent), New South Wales (32.0 per cent), Victoria (9.3 per cent) and Queensland (7.7 per cent).

South Australia (10.5 per cent) and Western Australia (8.3 per cent) recorded decreases in seasonally adjusted terms.

The latest numbers predate Stage 4 COVID restrictions in Melbourne.

Housing Industry Association Chief Economist Tim Reardon welcomed the latest boost in activity but cautioned that activity in multi-residential building would remain subdued until there was greater clarity about the pathway to overseas migration.

“The HomeBuilder program has been very positive for the detached house sector but the impact of this program is yet to be seen in ABS approval data. The lift in detached house approvals in July is more likely reflect building application lodgement and processing returning to normal after the shut-down,” Reardon said.

“Today’s ABS Building Approvals data shows detached house approvals are 2.8 per cent lower over the three months to July despite an 8 per cent increase in the month of July. From a very low base multi-unit approvals jumped 20.1 per cent in July, but approvals in the three months to July remain 35 per cent below the level a year earlier.”

“The number of multi-unit approvals during the three months to July was still the weakest three-month total since early 2012.”

“Activity in this part of the market is likely to remain subdued until there is greater certainty about the pathway for overseas migration to be restored.”

Going forward, Reardon said market conditions will continue to diverge between detached homes and multi-unit markets.

He says the downturn in multi-unit construction is concerning.

“Over the last decade metropolitan planning strategies have sought to supply a greater share of new housing within the existing urban footprint and the building industry has responded. At the peak of the cycle multi-unit dwellings accounted for half of all new homes approved.

“There has been significant investment in building the capacity of the industry to deliver the higher density dwelling types that planning systems have sought to provide. A sharp downturn in activity in this market leaves many jobs at risk.

“Until there is clarity on when overseas migration is restored there will be an ongoing decline in multi-unit construction.

“Conditions in the markets for new detached houses and new multi-unit dwellings will continue to diverge. The Multi-unit market has been slowing since the start of 2018 and the cessation of migration will compound this slowdown.

“The detached market will benefit from HomeBuilder and several other state initiatives which will underpin work on the ground in the December quarter. New Home Sales data suggests that detached house approvals will increase toward the end of the year.”