he latest ABS data on building approvals has revealed a fall in total dwelling approvals for September, becoming the third-lowest month since June 2012.
The Australian Bureau of Statistics (ABS) latest data found the seasonally adjusted total number of dwelling approvals fell 4.6 per cent in September to 13,144, following the 8.1 per cent rise in August.
The decrease saw the trend of total dwelling units approved, 13,404, fall to the lowest point since June 2012, apart from brief dips in March and April earlier this year.
NSW and Western Australia saw the greatest monthly drop in total dwelling units approved, falling 10.5 per cent to 3,369 and 11 per cent to 1,120, respectively, while Victoria was third with an 8.9 per cent drop to 4,524.
However, Queensland, Tasmania and South Australia bucked the trend, with dwelling approvals rising in those states. The Sunshine State saw the largest monthly change, rising 34.6 per cent with 2,741 dwellings approved, while Tasmania also had a considerable increase of 18.3 per cent with 272 approved.
The breakdown of the dwelling approvals found the drop in approvals was across both private sector houses and the private sector dwellings excluding houses.
ABS head of construction statistics Daniel Rossi said: “Approvals for private sector dwellings excluding houses fell by 5.1 per cent, following a 10.1 per cent rise in August.
“Approvals for private sector houses dropped 4.6 per cent, following a 7.2 per cent bounce last month.”
The bureau also found the value of total building approvals fell 4.9 per cent in September to $12.45 billion, which followed a flat result in August.
The decline in the total value was due to the value of new residential buildings falling 3.6 per cent to $5.83 billion, with the value of non-residential buildings falling 7.2 per cent to $5.55 billion.
The reduction in building approvals followed the ABS’ latest lending indicators data that found the value of new loan commitments by owner-occupiers for the construction of dwellings fell 0.9 per cent to $1.5 billion in September, a fall of 29.7 per cent over the past year.
However, the number of new loan commitments by purpose data found the number of owner-occupiers taking out a loan for the construction of dwellings rose 2.6 per cent in September to 2,688, but was still down 27.5 per cent on the previous year.
AMP’s deputy chief economist Diana Mousina said the drop in building approvals meant the nation would fall substantially short of its new target of building 240,000 homes a year as part of the National Housing Accord.
Ms Mousina stated: “Building approvals are running at 167,000 over the year which is way below population growth. Australia needs to be building around 225,000 new dwellings a year to keep up with high population growth which is running at a very high 2.7 per cent year on year.”
Harry Ottley, economist at Commonwealth Bank of Australia (CBA), said the September result was weaker than the bank was expecting, with the 13,144 figure near decade lows.
He also added that the approval level was weak, “especially on a per-capita basis given strong population growth on top of shortages in the supply of housing”, commenting that “completions must average 20,000 per month from July next year to meet federal government targets”.
Housing Industry Australia (HIA) chief economist Tim Reardon said Tuesday’s (7 November) rate hike would only further weaken building approvals and the construction industry.
Mr Reardon claimed: “Today’s rate rise is unnecessary and will cause further contraction in new home building, constraining the supply of new homes.”
Chief executive of Master Builders Australia, Denita Wawn, stated red tape, planning delays and insufficient land releases were causing impediments to getting dwellings approved and constructed.
She revealed: “These unnecessary delays to construction ultimately drive up the cost of building, which has already faced inflationary challenges with building product prices and a tight labour market.
“With a housing target of 1.2 million homes in five years, to realistically achieve this goal, we need to reduce the time it takes to build.”