Housing approvals falling away
Demand for new dwellings continues to fall at a reasonably sharp rate. In October, total approvals were 12.9% lower than in September and 8.1% lower than in October 2020. However, with annualised approvals 27.5% higher than a year ago, at 228,674 dwellings, there is a mountain of work still in the construction pipeline.
As the approvals data shows, the decline in monthly approvals is continuing and has picked up pace in the last couple of months. No surprise, with the lockdowns of the last few months.
What may be of some interest is the trend for house approvals is softer than for total dwellings. That is, compared with September, house approvals in October were up 4.5% and are only 4.4% lower than in October 2020. The result is that other formats have taken a bigger hit as the approvals market has begun to cool.
This can be observed in the next chart, which shows the entire rise (and then some) in total approvals to the end of October, has been supplied by free-standing houses. The table that comes with the chart shows house approvals year-ended October 2021 reached 152,681 dwellings, up a massive 36.7% on the prior year.
The data shows the fundamental resilience of the shared dream of a patch of land of our own and a house and a yard (perhaps room for a pony? – perhaps not, but at least for a dog!).
If you want a more rational response to the enduring power of the stand-alone home, perhaps we need go no further than Michael Bleby, who wrote in the Australian Financial Review that Stockland is getting out of retail and retirement and focussing entirely on residential. They head where the money goes and without doubt, for most of Australia’s history, that’s residential.
One feature of the lockdowns – from a housing market perspective anyway – is that they have not really dampened the new dwelling market as evidenced by Victoria. It seems counterintuitive, but Victoria continues to top the approvals, as the chart below shows.
However, delve deeper and it is important to note that Victoria’s annualised dwelling approvals growth (8.3%) was ahead of only the ACT (5.4%) over the last year. Perhaps there is some suppression of activity when you are unable to leave your front door?
This still staggering dwelling approval data all begs the question, just how large is the building pipeline of work at the moment? You can read more about that in the next item in this edition of Statistics Count.