The Housing Industry Association , the voice of Australia’s residential building industry said that residential building approvals remained close to record levels during February, as per the latest ABS figures.
According to HIA Senior Economist, Shane Garrett, although approvals fell by 5.0 per cent during February compared with January, the overall picture is one of strength in the sector. Compared with the same time last year, approvals activity has increased by well over 20 per cent.
Shane Garrett explains that approvals typically can take about six months to translate into activity on the ground. Observing that a continuing strong volume of new supply will flow through to help alleviate dwelling prices for the existing stock, he emphasised the fact that strong residential building activity was a good thing for affordability.
Recent growth in approvals has been driven more by detached houses than by multi-units. In the three months to February, detached house approvals rose by 7.3 per cent while multi-unit approvals fell by 6.9 per cent.
However, Shane Garrett cautions that even though total activity is at a high level, the performance of the multi-unit segment indicates a patchy market. With approvals declining in four states, the market recovery cannot yet be described as broad-based.
Shane Garrett said it was therefore important that policy settings remained favourable to stronger housing activity. For instance, the latest indication from the RBA that interest rates would remain low for some time was welcome. He concludes that it is crucial land supply policies become more accommodative to Australia’s increased housing needs.
During February 2014, growth in seasonally adjusted building approvals was recorded in Victoria (+1.9 per cent), Western Australia (+4.6 per cent) and in Tasmania (+0.9 per cent). Building approvals declined during February in New South Wales (-5.8 per cent), Queensland (-15.6 per cent) and South Australia (-14.8 per cent). In trend terms, building approvals increased by 7.9 per cent in the ACT, but declined by 20.8 per cent in the Northern Territory.
