The latest data from the Australian Bureau of Statistics (ABS) revealed 14,529 dwellings were approved in November, slightly up from the 14,295 approvals recorded in October.
Expecting some “statistical payback” from last month’s 7.2% seasonally adjusted increase, CBA economist Harry Ottley said.
“The result was an upside surprise, with both our forecast and the market consensus being negative in the month," Mr Ottley said.
The 6.7% gain in multi-unit dwellings drove the overall growth.
However results were mixed by state. Private sector dwelling approvals rose in Victoria (up 7.8%) and South Australia (up 6.0%) but fell in Tasmania (down 22.6%), Queensland (14.6%), New South Wales (down 6.9%), and Western Australia (down 5.5%).
Despite the monthly increase, total approvals were lower year-on-year, on account of rate hikes and increased material costs.
“In original terms, 70,900 dwellings were approved between July and November in 2023, compared with 81,954 over the same period in 2022,” ABS head of construction statistics Daniel Rossi said.
Approvals for detached houses slipped from its upward trajectory, falling 1.7% in November after it posted a 2.9% increase in October.
High cash rate slowed down approvals, but there is a growing momentum
Tim Reardon, chief economist at the Housing Industry Association (HIA), attributed the slowdown in approvals to the rise in cash rate.
“The low volume of building approvals throughout 2023 will see the volume of homes commencing construction continue to slow this year,” Mr Reardon said.
“Other leading indicators of activity in the housing market, such as new home sales and housing finance data, are also consistent with their confirmation of this projected slowdown.”
Mr Reardon also noted that the continued fall in the number of approved homes indicates a slow start to the Australian government’s ambition to build 1.2 million new homes in five years.
However, accounting for the slower pace of rate hikes in 2023, CBA sees growth is on the horizon.
“The level remains subdued, especially on a per-capita basis. But there is clearer, albeit still modest upward trend now in place,” Mr Ottley said.
If monetary policy is eased this year, CBA expects approvals to increase, given the underlying demand for new housing amid the current shortage.
Photo by Jeriden Villegas on Unsplash
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