The surge in apartment approvals in Victoria managed to lift overall building approvals, which grew at a stronger-than-expected pace in December, according to the Australian Bureau of Statistics.

However, the 2.1% gain in December was not able to save the total number of building approvals for the year, which declined by 19.1%.

"The start of 2019 was tough for the residential building industry with the credit squeeze, falling house prices, and uncertainty surrounding the federal election putting a dampener on confidence," said Angela Lillicrap, an economist at the Housing Industry Association (HIA).

Still, the improvement witnessed in the final months of 2019 could suggest that the building industry will not continue to drag Australia’s economic growth this year, said Lillicrap.

The table below shows the seasonally-adjusted quarterly gains in building approvals in each state:

Growth Building Approvals – December 2019 Quarter


Growth (%)




South Australia


New South Wales






Western Australia




(Trend terms)

Northern Territory


(Trend terms)

In terms of housing type, approvals grew by 0.3% for detached homes and 4.9% for townhouses and apartments over the month. On a quarterly basis, detached house approvals hit an annualised level of 101,240, which was similar to the building volumes in 2018.

Maree Kilroy, an economist at BIS Oxford Economics, said the positive momentum in the established property market could set the scene for a recovery in approvals this year.

"All states and territories are expected to see growth over the next 12 months, driven mostly by the house and medium-density segments of the market," Kilroy said.

Building approvals are also expected to get a further boost from the increasing housing prices that have been assisting in bringing investors back to the market, said Lillicrap. Recent figures from CoreLogic show a 4.1% annual gain in dwelling values in January.

However, it is unlikely that the market will see the same boom of investors as experienced in the previous upturn due to several factors, including the restrictions on foreign investments and credit access.

"Constraints on access to credit will continue to be the biggest impediment to future growth in building approvals," Lillicrap said.