The Housing Industry Association (HIA), the voice of Australia’s residential building industry, is upbeat about the new home construction segment in 2014 based on ABS figures for residential building approvals.
HIA Chief Economist, Dr Harley Dale explains that building approvals for the month of March 2014 are consistent with healthy growth in new home building activity this year, although the approvals cycle itself may well have peaked.
He observes that new home building has a large reach into the wider domestic economy, making the sector very much a barometer for Australia’s economy in 2014. Leading indicators such as building approvals are clearly a positive for the economic outlook. However, how many of these approvals are converted into dwelling commencements and over what timeframe will exert a considerable influence over wider domestic economic activity.
Total seasonally adjusted building approvals in March 2014 fell by 3.5 per cent to 15,598, marking the second consecutive monthly decline. Detached house approvals were effectively flat in the month (-0.5 per cent) but grew by a healthy 7.7 per cent over the March quarter. Approvals for ‘other dwellings’ fell by 7.5 per cent and were down by 7.2 per cent in the same period.
Harley Dale notes that the momentum in approvals has slowly shifted from multi-units to detached houses, which is evident in the March quarter results. Multi-unit approvals hit a record high in the December quarter last year, he noted.
Harley Dale concludes there is a considerable amount of economic uncertainty and angst around at present; it will therefore be a very beneficial outcome for the Australian economy if the new home building recovery can carve through all that while at the same time broadening its geographical reach.
Seasonally adjusted building approvals increased in March 2014 in New South Wales (+8.0 per cent) and Tasmania (+33.1 per cent). Approvals were flat in South Australia, and fell in Victoria (-12.5 per cent), Queensland (-3.3 per cent), and Western Australia (-9.1 per cent). In trend terms, building approvals increased by 0.7 per cent in the ACT, but declined by 25.0 per cent in the Northern Territory.