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Dwelling approvals expected to dip post-COVID-19

While data highlights “no evident impact” on dwelling approvals to March 2020, economists anticipate the new-build market to take a hit over the next coming months.

The number of new dwelling approvals increased by 1.3 per cent in March, in trend terms, according to new data released by the Australian Bureau of Statistics.

The positive result was largely driven by an uptick in private sector dwelling approvals excluding houses, which rose 2.8 per cent in trend terms in March, while private sector housing approvals recorded a 0.2 per cent rise across the combined markets.

According to the ABS data, of the states and territories, approvals in NSW saw the strongest outcome, with a 5.2 per cent rise month-on-month, in trend terms, with increases also reported in Tasmania (up 3.4 per cent), Western Australia (up 2.2 per cent) and Victoria (up 0.7 per cent).

Meanwhile, ACT recorded a 7.0 per cent drop in the number of dwellings approved in March when compared with February (in trend terms), while South Australia’s figures fell 4.9 per cent over the month.

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Additionally, Queensland dwelling approvals fell 1.8 per cent in trend terms in March and the Northern Territory figures remained flat month-on-month.

The figures for private sector housing approvals fared worse than the overall figures, with only NSW and Victoria experiencing a rise in March, of 1.4 per cent and 0.1 per cent, respectively, in trend terms.

Elsewhere, declines were recorded in South Australia (1.4 per cent), Queensland (0.9 per cent) and Western Australia (0.1 per cent) over the month for private housing.

The value of total building approved also rose in March, up 1.3 per cent in trend terms, and has now risen for the last four months. 

The value of residential building rose 0.5 per cent, while non-residential building increased 2.3 per cent, according to the ABS data.

According to the director of construction statistics at the ABS, Daniel Rossi, the March results show “no evident impact” on dwelling approvals due to the COVID-19 outbreak. However, this will likely change “in the coming months” as results for April and beyond are collected.

Commenting on the data, BIS Oxford Economics economist Maree Kilroy noted that while building approvals held strong above 15,000 for the month, “given approval processing time, the COVID-19 shock has yet to really show through in the approval data.”

Ms Kilroy anticipates that approvals will weaken over the remainder of 2020 “in response to significantly weaker demand for new dwellings”.

[Related: Auction volumes remain subdued]

Dwelling approvals expected to dip post-COVID-19
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