State bucks approval downtrend

By Gerv Tacadena | 31 Jul 2020

The latest building approval figures continue to reflect the impacts of the COVID-19 outbreak, but one state seemed to have bucked the trend for detached homes in June.

Victoria was the only state to record a gain over the month, with approvals for detached dwellings increasing by 0.9% on a seasonally-adjusted basis, according to the latest figures from the Australian Bureau of Statistics (ABS).

On the other hand, unit approvals went down in the state, albeit only slightly at 0.2%. This is compared to the double-digit declines recorded in New South Wales (14.8%), Western Australia (11.7%), Queensland (10.9%), and Tasmania (10.8%).

"The impact of COVID-19 was evident on dwelling approvals in June. Falls were recorded in all states, and across both detached and attached dwellings," said Bill Becker, assistant director of construction statistics.

Victoria's gain in housing approvals, however, could be short-lived, said Maree Kilroy, an economist from BIS Oxford Economics.

"The second Melbourne lockdown is weighing negatively on turnover and will drag on new dwelling demand in Victoria, amplifying geographical discrepancies in the housing demand over the short-term," she said.

Overall, the number of dwellings approved in the month declined by 4.9%, dragged by the 5.7% decline in detached houses and the 5.3% decline in units.

Kilroy expects the national downtrend in approvals to continue over the coming months, given several factors including a difficult labour market and a weak population growth.

An analysis from the Housing Industry Association (HIA) showed that the number of new houses approved in the month hit its lowest level since June 2013 while that of units reached its weakest since 2012.

While the HomeBuilder scheme helped sales numbers to rise, its impact on building approvals might come at a later time, said Geordan Murray, a senior economist for HIA.

"It is still too early to see an impact in the approvals data. HIA anticipate building approvals data will continue to fall for a number of months, before HomeBuilder halts the decline," he said. "The lift in sales following the announcement of HomeBuilder will become evident in approvals data later in the year."

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