According to the latest data released by the Australian Bureau of Statistics (ABS), there has been a significant increase in the number of approved residential dwellings. In January, the total number of approved dwellings rose by 6.3 percent to reach 16,579, following a 1.7 percent increase in December. This growth trend has been consistent, with a 14.0 percent increase in total dwelling approvals over the three months leading up to January compared to the same period the previous year.
The economist from the Housing Industry Association (HIA), Maurice Tapang, attributes this growth to several factors, including low unemployment rates, recovering real wages, and strong population growth. Tapang also noted that these increases in approvals occurred before the cash rate was cut, indicating positive momentum in the housing market. As households slowly return to the market and start building new homes, this trend is expected to continue.
While the overall growth in dwelling approvals is promising, there are variations across different states. Queensland, South Australia, and Western Australia have been the driving forces behind the national gains in detached house approvals. In Western Australia, there has been a significant increase of 29.2 percent in detached house approvals compared to the previous year. South Australia follows closely with a 27.5 percent increase, and Queensland with a 13.9 percent increase. On the other hand, the Australian Capital Territory experienced the largest drop in detached house approvals at 50.4 percent, followed by New South Wales with a decrease of 9.5 percent, Tasmania with a decrease of 7.0 percent, and Victoria with a decrease of 0.9 percent.
Tapang explains that the decline in New South Wales is primarily due to high land costs and challenges in delivering new housing, particularly in Sydney. He emphasizes that states and regions with lower land costs and lower taxes on new homes will experience a more evident rise in home building activity, while those with higher tax imposts will remain weak.
Despite the slight increase in housing approvals, Tapang highlights that Australia still faces supply shortages, and more needs to be done to meet the long-term housing targets. He urges the Australian government to remove barriers to housing supply, especially in the lead-up to the 2025 federal election. Matthew Kandelaars, the Group Executive of Policy and Advocacy at the Property Council, echoes this sentiment, emphasizing the need for sustained growth to meet housing targets.
The data also reveals a 12.7 percent increase in approvals for private dwellings excluding houses, such as townhouses and apartments. This rise is particularly driven by large apartment buildings in New South Wales. However, Kandelaars points out that apartment approvals have declined significantly over the past decade, with thousands fewer approved compared to ten years ago. This decline can be attributed to factors such as regulatory constraints, opportunistic taxes, and low productivity, which limit construction in this sector.
With Australia needing to build over 20,000 homes per month to reach its target of 1.2 million new homes by 2029, industry leaders are calling for government action. Kandelaars concludes that while there is still much work ahead, the increasing approval numbers are a positive sign, and he hopes to see this trend continue.
In summary, the latest data on residential dwelling approvals in Australia indicates a positive growth trend. Factors such as low unemployment rates, recovering real wages, and strong population growth contribute to this increase. However, there are variations across states, with some experiencing declines in detached house approvals. The need for sustained growth and the removal of barriers to housing supply are crucial to meet long-term housing targets.
