NSW units drive uptick in dwelling construction approvals

New data from the Australian Bureau of Statistics (ABS) has shown there was an 8.2 per cent rise in dwellings approved for construction in December, to a total of 17,698, following on from a 2.6 per cent rise in November.

However, year-on-year, total dwelling approvals had fallen by 7.5 per cent.

Apartments, town houses, units and the like had driven the monthly rise in December, with a 27.5 per cent increase in private sector dwellings excluding houses, to a total of 7,008 approvals.

The non-house segment had risen by 24.5 per cent from December 2020.

Houses on the other hand, dropped by 1.8 per cent from November to December 2021, down to 10,444 approvals. There were 21.3 per cent less house approvals year-on-year.

Diana Mousina, senior economist at AMP Capital commented the yearly decline reflected a drop in demand post-HomeBuilder, which had boosted approvals over 2020 and 2021.

“A little further downside in house approvals is likely from here,” she stated in a research note.

State-by-state, NSW recorded a 32.1 per cent ascent in dwelling approvals during the month, up to 4,917, mostly comprised of dwellings excluding houses.

Victoria posted a 2.5 per cent increase in overall approvals, up to 5,733.

But other states, such as Queensland (down 14.8 per cent to 3,019), Western Australia (dropping 7.7 per cent to 1,459), Tasmania (down 7.4 per cent to 277) and South Australia (slipping by 0.3 per cent to 1,158).

Approvals for houses in particular rose by 0.8 per cent in Western Australia to a total of 1,313, but fell across other mainland states.

NSW observed a 7.9 per cent drop to 2,386 approvals, South Australia was down by 7.1 per cent to 865, Victoria’s approvals decreased by 1.5 per cent to 3,271 and Queensland’s approvals were clipped by 0.7 per cent, down to 2,121.

The value of total building approved fell by 2.1 per cent to $11.5 billion in December, mostly dragged by a fall in the value of non-residential building approved (down 16.3 per cent to $4 billion worth), following a 27.8 per cent rise in November.

The value of total residential building was up by 7.8 per cent to $7.8 billion worth, comprised of an 8.3 per cent increase in the value of new residential building (totalling at $6.4 billion) and a 5.2 per cent rise in the value of alterations and additions, to $1 billion.

November had seen a lift in dwelling construction approvals, following a 13.6 per cent drop in October.

But similar to Ms Mousina, ANZ senior economist Adelaide Timbrell tipped the uptick may not continue, amid higher interest rates and other factors.

[Related: New home loans record high]