Australian house approvals reached a record high level in December as policy stimulus continues to boost the outlook for residential construction activity, though the effects of the pandemic are still weighing heavily on the higher-density segment.
Building Approvals — December | By the numbers
- Dwelling approvals (seasonally adjusted) came in much stronger than expected rising by 10.9% in December (vs 3.0% forecast, prior rev 4.6%) to 19,537, elevating annual growth to 22.8% from 17.7%.
- House approvals lifted for a 6th consecutive month soaring by 14.9%m/m to a record high of 13,785 (55.4%yr)
- Unit approvals increased by 2.5% in December to 5,752 but remain well down through the year at -18.4%.
Building Approvals — December | The details
December saw the upswing in dwelling approvals rising at an accelerated pace of 10.9% in the month. This may have been driven by higher volumes of approvals going through before the tapering of the Federal government's HomeBuilder scheme (from $25k to $15k) from the start of 2021. In the December quarter, dwelling approvals soared by 22.5% to 54,191 driven by surging house approvals that lifted by 26.7% to 37,063 as approvals for units posted a smaller 14.4% rise to 17,128.
The other area seeing an upswing due to the support of the HomeBuilder scheme is residential alterations with the value of these approvals granted in December pushing up by another 8.1% in the month to establish a new record high at $0.94bn (37.1%yr). In contrast, non-residential approvals (commercial work) have been hit hard since the onset of the pandemic with firms reluctant to commit to new projects, with the value of these approvals 17.2% lower over the year at $3.77bn.
Turning to the states, house approvals are surging across the nation reflecting the broad-based nature of the fiscal and monetary stimulus measures enacted. The elevation has been strongest over in Western Australia (117%yr) which has occurred on additional support from the state government there. However, high-density approvals are being weighed down by the impact of the closure of the international border that is limiting population growth and keeping supply higher than otherwise.
Building Approvals — December | Insights
The sharp and sustained rise in dwelling approvals in response to the range of stimulus measures enancted points to a very strong upswing in detached residential construction activity which, allowing for lags, will likely be starting to take effect from the second half of this year.
