Housing approvals begin to flatten out
Over the year-ended June 2021, Australia’s dwelling approvals exploded 26.5% to 218,356 separate approvals. Led by a stunning 41% increase in approvals for new detached houses, the demand for new homes has been touching on all-time highs. However, the latest data shows approvals are flattening out, now that fiscal-stimulus programs have been wound back.
The very steep rise in total dwelling approvals, and especially new houses can be seen here.
Statistics Count has previously discussed the massive pipeline of work that comes from rampant approvals. The reality is that with an annual load of almost 147,000 houses to build, there is a huge amount of work ahead just in the free-standing formats.
But the growing workload does not end there!
As the next chart shows, there is growth in the related semi-detached (Townhouse) sector also. For the forestry and wood products industry, they are our dwellings to build, more often than not.
Even multi-storey towers (9+ Storeys) that softened over the last year as investor and overseas interest dried up, are pretty solid, with further growth expected, mainly due to the slower pace of price increases experienced in that sector than for free-standing houses.
Writing in the AFR, Michael Bleby outlined that house prices were up 16% in 2021 year-to-date, while apartment prices were up 8%. That is enough to switch some interest from free-standing dwellings.
Latest data shows that monthly approvals for Houses fell 11.6% in June, compared to May. That’s a reasonably large fall, and it will not be the last. However, the June house approvals number was still over 43% higher than in June 2020. Total dwelling monthly approvals in June 2021 were down 6.7%, but again up 48.9% compared with June 2020.
From a state-by-state perspective, the annualised leader remains Victoria, where total dwelling approvals were up 12.7% to 67,811, with houses up 31.7% at 47,742! By contrast, total approvals in New South Wales were up 22.3% to 59,204, with houses up 24.3% to 30,062 dwellings.
Both the main states are recording big numbers and have plenty of work ahead of them, as indeed does the entire nation, with the exception of the ACT.
Dwelling approvals data is so important because it tells us, more or less, what lies ahead. Right now, what lies ahead is a possibly record large pipeline of approved work that needs to be built.
Busy times indeed!