Building Approvals Fall to 8 Year Lows


Building approvals for new apartments, townhouses and semi-detached homes have declined for four consecutive months, the longest-running decline since the global financial crisis and a further 5 per cent fall from May. 

Total dwelling approvals were down 4.9 per cent, after falling 15.8 per cent in May, according to the latest ABS building approvals data.

Across the month of June, the effects of Covid-19 on home-building were mixed, with a broad-based fall in dwellings approved, across all housing types and states, while the value of alterations and additions to residential buildings rose sharply.

House approvals fell by 5.8 per cent with private sector council consents down 5.7 per cent and public sector approvals 11.8 per cent lower in June.

Apartment approvals fell by 3.1 per cent with private sector consents down 5.3 per cent, to be down 23.4 per cent across the quarter, but public sector approvals rose 57.2 per cent in June.

Compared with February, monthly building approvals are now down 22.9 per cent, including a 6.9 per cent decline in house approvals and a 42.9 per cent decline in units.

Building approvals

Total homes (no. % m/m)−4.9−15.8
Houses (no % m/m sa)−5.8−3.8
Apartments etc (no % m/m, sa)−3.1−33.3
Non-residential ($ % m/m, sa)+17.8−6.0

^ Source: Australian Bureau of Statistics (ABS)

The economic contraction, falling home prices, high unemployment, consumer caution, lower inbound migration and Covid-19 related restrictions contributed to a broad softening in demand for new homes.

ANZ economist Adelaide Timbrell said the outlook for building approvals and activity over the next year remained weak.

“Slow population growth, elevated unemployment and rising vacancy rates are all slowing the demand for new housing,” Timbrell said.

“We expect more declines in approvals in the months ahead.”

Before the onset of the Covid-19 crisis, the housing pipeline had already lost a lot of ground.

Over the 12 months to February, total new dwelling approvals stood at 172,021, down nearly 16 per cent on their level a year earlier and 25.7 per cent below the decade average of 197,107 dwellings.

“With Covid-19 disruptions becoming more uneven geographically, state approval numbers are also likely to see a widening divergence in the second half of the year,” Westpac senior economist Matthew Hassan said.

“Queensland, Western Australia and South Australia are well placed to rebound and respond to stimulus measures [with] NSW seeing a slower reopening and Victoria still contending with a large 'second wave' outbreak.”

New South Wales dwellings had a monthly fall of 14.8 per cent, while Western Australia and Queensland declined 11.7 per cent and 10.9 per cent respectively over the period.

Tasmania declined by 10.8 per cent, South Australia fell 4.6 per cent and Victoria dipped 0.2 per cent compared with May.

Notably the month of June did return an increase in value of renovation approvals, up 11.4 per cent, possibly driven by homeowners taking advantage of the federal government's $25,000 Home Builder scheme.

Meanwhile, the value of non-residential building approved also rose in June, but still remains below the levels recorded in early 2020.


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