Volatile multi-unit sector drives increase in residential construction approvals

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The Housing Industry Association (HIA) believes figures released yesterday by the Australian Bureau of Statistics supports their claim that the residential construction industry is entering the peak of its current cycle.  

Figures from the ABS show the number of dwellings approved for construction rose by 2.2% over September, with multi-unit approvals driving the overall increase.

“Around the nation, there was a total of 9,300 ‘other dwellings’ (predominantly multi-unit) approved during September,” HIA economist Geordan Murray said.

“While this equates to a 6.1% increase in approvals during the month, the level was still well below the high water mark set earlier in the year,” Murray said.

“The increase in multi-unit approvals was balanced by a modest decline of 1.9% in detached house approvals.”

While there was an increase of multi-unit approvals during September, the figures show they weren’t spread evenly across the country.

“Approvals for dwellings in multi-unit developments continued to demonstrate a high degree of volatility, particularly at the state level,” Murray said.

“There were large fluctuations in a number of states, most notably in Queensland where multi-unit approvals jumped by more than 80%.”

During September, new home building approvals increased in Victoria (5.0%), Queensland (41.6%), and Tasmania (31.7%).

Approvals declined in New South Wales (16.6%), South Australia (14.9%), Western Australia (8.9%), the Northern Territory (3.5%) and the Australian Capital Territory (0.7%).

The September increase in approvals means there has been a record 230,298 dwellings approved in the 12 months to the end of September, which the HIA says will tide the construction industry over as the number of approvals eases in the coming year.

“Today’s result reaffirms our view that we are seeing the peak in the current cycle, and we expect to see building approval numbers easing back throughout early 2016,” Murray said.

“However, there is a very large volume of work in the pipeline that will sustain a very healthy level of actual building activity throughout the upcoming year.”
 

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