Australian dwelling approvals posted a much stronger-than-expected rise of 17.4% in March, driven by rebounding in higher-density approvals in New South Wales and Victoria. House approvals hit a new record high level in the month, as did alteration approvals, with stimulus measures to frontload residential construction activity over the next year or so, providing key support to the economic recovery.
Building Approvals — March | By the numbers
- Dwelling approvals (seasonally adjusted) advanced by 17.4% in the month following on from a 20.1% rise in February, with March's total of 23,176 coming in just below the record high for a single month as annual growth accelerated to 47.4% from 22.1%.
- House approvals added to the previous month's 13.6% rise with a 1.2% lift in March to a new record high of 14,404, firming growth over the year to 62.2% from 59.7%.
- Unit approvals spiked higher by 59.4% in March to 8,772; the outturn swinging annual growth to +28.1% from -24.2%.
Building Approvals — March | The details
March's 17.4% rise in dwelling approvals extended the 20.1% increase in February, coming after a slow start to the year of -17.1% in January. Through the March quarter, dwelling approvals advanced by a strong 8.3%, led by a 10.7% boost from houses as the higher-density segment posted a more modest increase of 3.2%.
In level terms, house approvals surged to a record high quarterly total of 41,179 amid the ongoing boost from the HomeBuilder scheme and very low rates. Despite also rising, the quarterly total on unit approvals of 18,177 was low by historical standards, with this segment much more affected by the headwinds to demand associated with the pandemic.
With the HomeBuilder scheme winding down in March, alteration approvals made a final push higher, rising by 7.3%m/m to a record level of $1.07bn (46.7%yr). In the non-residential space, approvals have gathered momentum, albeit from a low base, with March's 59.4% rise coming after a 28.0% lift in February.
Across the states, New South Wales (26.9%) and Victoria (24.7%) outperformed in March on the back of strength in the higher-density segment. Evident over Q1 was the broad-based strength in Victoria, with house approvals rising by 13.7% and higher-density approvals up 20.0%; the rebound in the state was more delayed than elsewhere due to the second lockdown. Gains in the quarter were also strong in South Australia (24.9%) and Western Australia (10.9%), centred on strength in house approvals on the support of the HomeBuilder scheme. The chart (below) shows the flow of house approvals over the duration of the HomeBuilder scheme, with the largest gains coming from Western Australia, Queensland and Victoria.
Building Approvals — March | Insights
Dwelling approvals maintained their strength in March, led by the higher-density segment in New South Wales and Victoria. House approvals advanced to a new record high level in the month and for the quarter before the HomeBuilder scheme wound down at the end of March. Assuming all (or most of this) flows through to construction, there is now a very significant amount of residential work, including alterations, in the pipeline that will boost the domestic economy over the next year or so.