Long tail of housing approvals lingering as reno market kicks on
Australia’s housing boom, though showing signs of abatement, has yet to see significant declines, with new dwelling approvals at 231,807 separate dwellings for the year-ended April 2016. This was a solid 5.3% higher than for the year-ended April 2015. On a month-on-month basis, growth in total approvals was a stable and solid 0.5%, with April 2016 seeing approvals total 19,704 separate dwellings.
The chart below shows total housing approvals dipping slightly in recent months from the year-end peaks reached in late 2015, but remaining relatively stable and in a reasonably tight band.
To go straight to the dashboard and take a closer look at the data, click here.
What the chart also displays, but it is difficult to immediately discern, is that detached houses or free-standing dwellings continue to decline as a proportion of the total domestic housing market. At 116,400 approvals for the year-ended April 2016, houses declined by 1.5% over the prior corresponding period.
Moreover, as a proportion of total approvals, houses have declined from 53.7% year-ended April 2015, to 50.2% year-ended April 2016. In the general commentariat, the conversation is always skewed towards the extent to which there has been growth in 4+ storey apartment buildings. That is indeed a big story and brings with it implications associated with credit and the potential for a pricing bubble to emerge in the apartment market, if it has not already arrived. It also has cultural implications, or perhaps better put, reflects changes in culture and society more generally. The next item in this edition of Statistics Count takes a brief look at some of the demand supply drivers for apartment construction.
For this analysis, it is the circumstances involving free-standing dwellings that are of most interest. At least for now, it is houses that utilise by far the most wood. While the 116,400 approvals are relatively stable, albeit down, they are the mainstay of demand for Australia’s wood products.
However, there is much of interest in the remainder of the housing data, without going back over the apartment ground.
First, examination of growth in dwelling approvals by State shows that for the year-ended April 2016, the most populous state, New South Wales, has taken on its responsibilities and approved the largest number of new dwellings (70,305). It remains closely followed by Victoria (67,440), with Queensland (50,599) new approvals for the year. The three most populous states accounted for 81.3% of all approvals over the year, but they grew at quite different rates.
NSW approvals increased by 19.5% on the prior year, Victoria’s rose 3.3% and Queensland’s increased 12.6%. This relative growth is evident in the following chart.
To go straight to the dashboard and take a closer look at the data, click here.
The second point, more tellingly perhaps, is that the value of alterations and additions on Australian dwellings rose a solid 4.8% for the year-ended April 2016. They ended at AUD7.746 billion, their highest year-end total in almost four years. On a quarterly basis, alterations and additions totalled AUD1.933 billion in the March quarter, up 1.3% on the March quarter a year earlier. The chart below provides the details.
To go straight to the dashboard and take a closer look at the data, click here.
From almost any angle, the Australian residential dwelling market appears to be very strong, especially along the nation’s eastern seaboard.
Strong dwelling approvals and solid growth in expenditure on alterations and additions suggest the free-standing housing market (which after all still accounts for half of all new dwellings) remains very robust, despite the rise of multi-storey apartment living.
