Housing Approvals Finish Year on High

Home approvals rose during December after a lacklustre November, but 2022’s approvals were well down on the previous year’s.

According to the latest data from the ABS, in seasonally adjusted terms, approvals in the last month of 2022 rose 18.5 per cent after an 8.8 per cent decrease the previous month.

For the year, however, there were 115,358 new houses approved for construction in 2022, down by 21.8 per cent on the 147,552 approved in 2021.

ABS head of construction statistics Daniel Rossi said the increase in the total number of homes approved in December was led by a sharp rise in approvals for private sector dwellings excluding houses, up 56.6 per cent.

“The result was driven by a number of large apartment developments approved in New South Wales and Victoria,” Rossi said.

“Approvals for private sector houses continued to track downwards, falling by 2.3 per cent.”

Across Australia, total home approvals rose in NSW (48.4 per cent), Victoria (20.7 per cent), Queensland (8.3 per cent), and Western Australia (6.4 per cent).

Tasmania was down 49.7 per cent and South Australia down 24.6 per cent.

Approvals for private sector houses were mixed, with increases in WA (8.2 per cent), Victoria (0.3 per cent) and Queensland (0.2 per cent), while South Australia (-7.4 per cent) and NSW (-4.2 per cent) fell.

The value of total building approvals rose 3.0 per cent in December, after a 0.6 per cent decrease in November. The value of total residential building approvals rose 6.6 per cent, comprised of a 7.2 per cent increase in new residential building and a 2.7 per cent increase in alterations and additions.

The value of non-residential building approved fell 1.7 per cent, following a 2.2 per cent rise in November.

HIA chief economist Tim Reardon said the 2.3 per cent decline in house approvals in December was the second weakest monthly performance in the past 2½ years.

“Much of the decline between 2021 and 2022 was the expected consequence of the end of the HomeBuilder grant in 2021,” Reardon said.

“The market was also cooling as the cost of construction rose, and the change in consumer preferences due to the pandemic desire for space eroded.

“The adverse impact of the fastest increase in the cash rate in a generation will not be fully observed in building approvals data until later this year and will not hit building activity on the ground until late 2023.”