Housing demand soars following 8-year low

ABS Building Approvals data, released on Tuesday, 1 September, showed an 8 per cent increase in the month of July although detached house approvals still remain 2.8 per cent lower over the last three months.

“From a very low base, multi-unit approvals jumped 20.1 per cent in July, but approvals in the three months to July remain 35 per cent below the level a year earlier,” HIA chief economist Tim Reardon said.

The rise was driven by private sector dwellings excluding houses, which increased by 22.7 per cent in July, after falling to an eight-year low in June. 

“Meanwhile, private sector houses rose by 8.5 per cent, which was the strongest monthly increase since January 2014,” said Daniel Rossi, director of construction statistics at the ABS. 

“The number of multi-unit approvals during the three months to July was still the weakest three-month total since early 2012,” added Mr Reardon.

“Activity in this part of the market is likely to remain subdued until there is greater certainty about the pathway for overseas migration to be restored.

“Over the last decade, metropolitan planning strategies have sought to supply a greater share of new housing within the existing urban footprint and the building industry has responded. At the peak of the cycle, multi-unit dwellings accounted for half of all new homes approved,” Mr Reardon explained.

The economist believes the July results likely reflect improved consumer sentiment in May, on the back of falling COVID-19 cases and easing of restrictions.

Across the states and territories, dwelling approvals rose in Tasmania (50.0 per cent), NSW (32.0 per cent), Victoria (9.3 per cent) and Queensland (7.7 per cent). South Australia (10.5 per cent) and Western Australia (8.3 per cent) recorded decreases in seasonally adjusted terms.

Approvals for private sector houses rose in Queensland (15.6 per cent), NSW (14.3 per cent) and Victoria (6.1 per cent). Decreases were recorded in Western Australia (3.0 per cent) and South Australia (1.8 per cent).

The value of total building approved fell 3.9 per cent in July, in seasonally adjusted terms. The value of non-residential buildings fell 19.8 per cent to its lowest level since January 2018, after rising 20.7 per cent in June. Meanwhile, residential buildings rose 9.5 per cent in July.