The detached dwelling segment continued to boost national building approvals that lifted by a stronger-than-expected 2.6% in November. The effects of policy stimulus measures have driven a near 41% rise in detached dwelling approvals over the past 5 months to be at their highest level since early 2000.
Building Approvals — November | By the numbers
- Dwelling approvals (all sectors, seasonally adjusted) lifted by 2.6% to 17,205 in November, coming in stronger than the 2.0% rise estimated by markets, to be up by 15.0% on a year earlier. In the previous month, approvals had lifted by 3.3% (revised from 3.8%) for an annual rise of 15.6% (revised from 14.3%).
- House approvals advanced for a 5th straight month, rising by 5.9% to 11,712 to sit just below record highs having advanced by 34.5% over the year.
- Unit approvals declined by 3.9% to 5,493 which unwound the prior month's increase (3.8%) as the contraction in annual terms steepened to -12.2% from -9.2%.
The strong momentum in detached dwelling approvals showed no signs of easing up with a further 5.9% rise coming through in November — its 5th consecutive monthly rise equating to a 41% acceleration over the period. Key to this has been policy stimulus measures, notably the Federal Government's HomeBuilder scheme that offers grants for new builds and rennovations, as well as state government incentives for first home buyers and the tailwind from low interest rates. In contrast, approvals for higher-density housing types have come under pressure with the stimulus measures being more targeted to the detached segment, while the dynamics more generally have been unfavourable; elevated capital city vacancy rates have weakened investor sentiment and the imposition of the international border closure has created considerable uncertainty for developers previously accustomed to bringing forward projects to meet demand from strong inflows of overseas residents.
Across the nation, the upswing in dwelling approvals over recent months has been most pronounced in Western Australia, likely reflecting the additional support available to the first home buyer segment there. Victoria has lagged in this upswing due to the disruption associated with the state's lockdown but this will likely turn in the months upcoming as activity returns to more normal levels and the effects of the stimulus measures work through.
Building Approvals — November | Insights
Detached dwelling approvals continue to rise at pace in response to the policy stimulus measures introduced to support the economy through the recovery from the effects of the onset of the pandemic. This momentum likely has further to run with the Federal Government granting its HomeBuilder scheme with a 3-month extension to the end of March 2021 with access criteria widened but at a moderate level of support at $15k from $25k.
