Property approvals up down under

Photo credit: Kev Whelan

Property approvals are up Down Under, as residential building bucks overall contraction in the construction industry.

New dwelling approvals strengthened during May and remain at high levels, according to the Housing Industry Association. The HIA's stats show that new home approvals rose by 2.4 per cent to 19,414 in seasonally-adjusted terms.

A rebound in multi-unit approvals saw a 15.1 per cent increase occurring during May, while detached house approvals fell by 8.5 per cent during the month. A total of 218,442 approvals were registered in the year to May, a new record for approvals over any 12-month period since records began in 1983.

Seasonally-adjusted new dwelling approvals saw the strongest increase in Victoria (up 11 per cent), followed by New South Wales (up 8.8 per cent) and Queensland (up 3.6 per cent). A slight increase was also recorded in Western Australia (0.2 per cent). New dwelling approvals fell, though, in Tasmania (down 32.6 per cent) and in South Australia (down 9.9 per cent).

"Dwelling approvals recorded their third highest monthly total on record," comments Shane Garrett, HIA Senior Economist.

Indeed, the residential construction sector is now one of the major driving forces in Australia's overall construction industry, with activity slowing in both engineering and commercial areas.

The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index fell 1.4 points in June 2015, with new orders and employment also declining.

Engineering construction completed a full year in contraction (down 3.3 points) amid weaker mining-related projects and major infrastructure construction activity nationally. Commercial construction also remained in negative territory for an eighth consecutive month.

Apartment building, though, was the strongest performer in June, rising 6 points, while house building also returned to expansion (up 3.4 points).

HIA Chief Economist Harley Dale adds:: "The latest Australian PCI results confirm that residential construction is doing the heavy lifting for the domestic Australian economy. Revving up the infrastructure investment engine is
crucial, as we have been highlighting for a considerable time now, but think where the economy would be without the substantial impetus provided by healthy new home building activity."

"During 2014, new home building reached an all-time high and today’s figures indicate that we can look forward to a solid pipeline of new home building during the second half of 2015," adds Garrett.