The Housing Industry Association (HIA), representing Australia’s
residential building industry observes that the decline in building approvals
to a thirteen-month low indicates that the new home building cycle may have
reached a ceiling.
According to the latest building approvals data from the ABS, total
dwelling approvals declined by 11.0 per cent in seasonally-adjusted terms
during September, to reach a thirteen-month low of just over 15,000.
Detached house approvals eased back by 3.0 per cent during the month,
but remained 7.9 per cent higher than twelve months earlier. Multi-unit
dwelling activity was particularly weak during the month, with a 21.5 per cent
reduction occurring compared with the previous month and activity down by 34.2
per cent compared with the same period of 2013.
HIA Senior Economist, Shane Garrett notes that the new ABS figures
provide further evidence that the national recovery in new home building is
likely to have passed its peak. Going from a high of over 17,000 approvals earlier
in the year to a low of 15,000 in September, the reduction in new home building
is probably an indication of the patchy state of the labour market, as well as
increased consumer woes post-federal Budget.
Shane Garrett explained that recent HIA research showed an annual
requirement for 180,000 dwellings to be built each year but current output
seems to be drifting below the required levels. He recalled that during the
early days of the housing upturn, HIA had been vocal in its calls for policy to
facilitate new housing supply to be delivered more readily. Calling for a
course correction, he said policymakers need to adopt a more imaginative approach,
particularly around land supply and the delivery of housing infrastructure.
During September 2014, seasonally-adjusted new dwelling approvals
increased in Tasmania (+7.4 per cent), South Australia (+2.9 per cent) and
Western Australia (+2.1 per cent). Reductions in dwelling approvals affected
three states, including Victoria (-19.8 per cent), Queensland (-8.0 per cent)
and NSW (-7.0 per cent). In trend terms, new dwelling approvals increased in
the ACT (+4.2 per cent) but declined in the Northern Territory (-1.9 per cent).