Approved dwellings rise but it’s only tip of the iceberg
Smaller homes like units and town houses driving a lift in the number of approved buildings across the country.
INDUSTRY groups have been buoyed by improved data but are warning there is still much to be done to break the back of the housing crisis.
Units and town houses are driving a surge in homebuilding, according to the latest figures released this week by the Australian Bureau of Statistics.
The total number of dwellings approved rose 29.7 per cent in February to 19,022.
“The rise in total dwellings approved was driven by a 101.2 per cent rise in private dwellings excluding houses,” Daniel Rossi, ABS head of construction statistics, said.
“This follows a 25 per cent fall in private dwellings excluding houses in January and a 29.7 per cent fall in December.
“There have been a total of 195,434 dwellings approved, in original terms, over the past 12 months.
“This is a nine per cent increase on the 12 months prior to that.”
The value of total buildings approved rose 14.4 per cent in February to $20.43 billion, after a 7.8 per cent rise last month.
Residential buildings drove the overall rise, up 30.8 per cent to $12.50 billion to reach a new record high.
The result was comprised of a 35.9 per cent rise in new residential buildings to $11.21 billion and a 1.2 per cent fall in alterations and additions to $1.29 billion.
The value of non-residential buildings fell 4.4 per cent to $7.93 billion, after a 19.5 per cent rise in January.
Housing Industry Association senior economist Tom Devitt said the rise in detached house and multi-unit approvals numbers has been on the back of elevated population growth, low unemployment and three interest rate cuts last year.
“Approvals in February will be more reflective, however, of new homes sold in previous months,” Devitt said.
“The data doesn’t reflect the effects of two more recent rate hikes by the RBA, and the surge in fuel prices with the latest events in the Middle East.
“Much of the attention is focused on the surge in fuel and materials prices and their direct impacts on transport, materials and site costs.
“So far, events overseas represent a price shock, but not yet a supply shock.
“If overseas events are short-lived, oil prices are likely to stabilise. In this scenario, there is good reason to believe that ongoing pressure on inflation and interest rates should subside.
“If overseas events persist, the likelihood increases that the current price shock will feed into future expectations, ongoing inflation and, therefore, even higher interest rates.
“It is all the more important now for policymakers to enact meaningful reforms that lower the cost of new home delivery. This means reducing taxes, not increasing them, pausing further regulatory changes and addressing structural shortages of skilled trades,” Devitt said.
Property Council Group Executive Policy and Advocacy Matthew Kandelaars said the National Housing Accord target has focussed state governments on improving planning systems but warned that tougher structural reform and post-permit improvements are the next critical step.
“While today’s data is welcomed, approvals do not equal completions. Australia is already behind on delivery under the National Housing Accord, and the real test is whether these projects can move through construction and onto the ground,” Kandelaars said.
He said recent volatility in apartment approvals highlighted the importance of stable investment conditions, particularly for higher-density housing that delivers supply at scale.
“Monthly swings underline how sensitive apartment projects are to cost pressures, uncertainty and delays,” he added.
“In the current environment, with fuel price shocks, renewed construction cost escalation and global instability, stable investment settings matter more than ever.”
Kandelaars said closing the delivery gap would require greater focus beyond initial planning approval.
“Keeping approvals healthy and growing is essential, but it won’t be enough on its own. We need to focus on enabling infrastructure, streamlined post-permit approvals and better coordination with utilities so projects can move from approval to site.”
Urban Taskforce CEO Tom Forrest said But turning the housing approvals data into actual houses that people can live in will depend on what the Commonwealth can do to support housing related infrastructure and how they manage the inflationary effects of the oil crisis.
“There are strong headwinds before us, so any consideration of changes to taxes needs to be assessed in terms of their impact on housing supply,” Forrest said.
“While it’s not sensible to draw long-term conclusions from a single month’s data, the signs bring some hope to an industry that is facing further uncertainties with spikes in construction and finance costs spurred on by the Middle East situation.”
