House Approvals Fall Off Cliff with Decline Nudging 10pc

The total number of homes approved has fallen again, down 1 per cent in January.

The decline follows December’s hefty 10.1 per cent fall, according to fresh data from the Australian Bureau of Statistics (ABS).

ABS head of construction statistics Daniel Rossi said approvals for private houses fell 9.9 per cent in January.

“In trend terms, private sector houses have fallen for four consecutive months,” he said.

“Approvals for private sector homes excluding houses rose 19.5 per cent in January in seasonally adjusted terms, driven by a rise in apartment approvals in Queensland.”

Total home approvals fell in NSW (down 14.9 per cent), Victoria (9.8 per cent), and South Australia (7.2 per cent).

Meanwhile, rises were recorded in Queensland (31.8 per cent), Western Australia (11.4 per cent), and Tasmania (5.1 per cent).

Approvals for private sector houses fell in all states: Victoria (-16.7 per cent), NSW (-13.1 per cent), Western Australia (-7.3 per cent), Queensland (-1.7 per cent), and South Australia (-0.4 per cent).

The value of total building approved rose 14.7 per cent, after a 6.7 per cent drop in December. The value of total residential building rose 16.1 per cent, comprised of a 19.4 per cent increase in the value of new residential building and a 3.1 per cent fall in alterations and additions.

The value of non-residential building rose 12.4 per cent, after a 10.8 per cent fall in December.

Oxford Economics Australia senior economist Maree Kilroy said the decline in private house approvals was the weakest monthly result in more a decade—since April 2012.

“We are not surprised by the latest monthly movement for house approvals,” she said.

“Volumes have been poor in January the past few years and a rebound is expected in February.”

▲ Modelling estimates a stock deficiency of around 110,000 homes.

She said total home approvals were running at 162,640 annualised (original terms), a level well below Australia’s underlying home requirement.

“Our modelling estimates a significant stock deficiency of around 110,000 home and we expect this to grow further in coming years,” she said.

“Significant issues remain in the progression of approvals to completion—these will linger through 2024.

Residential starts are near the bottom of the cycle, with a trough of 153,700 expected for the 2024 financial year, down 11 per cent.

“Some encouraging leads are emerging. Development enquiries, land sales and construction finance leads suggest a turning point in the coming months, especially for houses.”