Home building rebounds down under

Photo credit: 8LettersUK

Data from the ABS shows that 16,425 dwellings were approved in May, an increase of 9.9 per cent during the month. After a relatively lacklustre month in April, this move takes approval numbers closer to the peak levels seen at the end of 2013 and January 2014.

“The three consecutive months of declining approval numbers following the peak in January this year had caused some observers to start questioning the longevity of the home building recovery. This [rebound] gives us confidence that the recovery has a way to run yet,” said HIA Economist Geordan Murray.

“Residential building approvals reached a peak in January this year when over 17,700 dwelling approvals were recorded. To get to the record level in January it took a situation where all the ducks were sitting in a row – we had the five largest states all recording strong approval numbers at the same time.”

“Since then, the characteristic volatility in multi-unit approvals has meant that we haven’t revisited the January high but the volume of approvals still points to a very strong level of new home building activity throughout 2014.”

Indeed, while construction activity was initially limited to New South Wales and Western Australia, the recovery appears to be spreading, with approvals in the three months to May markedly higher year-on-year in all jurisdictions, except for ACT.

In seasonally adjusted terms, the volume of detached dwelling approvals was steady at 9,426, up by 0.6 per cent in the month. There were 6,998 multi-unit dwellings approved, which represents an increase of 25.5 per cent in the month. A rebound in multi-unit approvals in NSW (up by 47 per cent) and Queensland (up by 150 per cent) drove the increase in multi-unit approvals after both posted particularly weak results in April. All other major markets recorded falls in multi-unit approvals in May, most notably in Victoria, where a decline of 19 per cent was observed.