Australian dwelling approvals lifted for the first time since the expiry of the HomeBuilder scheme posting a 6.8% rise in August. That defied expectations for further weakness as both detached and unit approvals increased.
Building Approvals — August | By the numbers
- Dwelling approvals (seasonally adjusted) posted an unexpected rise in August, up 6.8%m/m to 18,716 against the market consensus for a 5% fall (prior -8.6%). Annual approvals growth lifted from 21% to 31.2%.
- House approvals lifted by 3.8%m/m to 12,125 (23.7%yr)
- Unit approvals advanced by 12.7%m/m to 6,591 (47.7%yr)
Building Approvals — August | The details
An upside surprise on building approvals in August ended a run of four consecutive monthly falls following the expiry of the HomeBuilder scheme. After falling by 25% from their March peak, dwelling approvals were up 6.8%m/m in August. Gains were seen in units (12.7%) and detached houses (3.8%m/m), with both segments posting their best outturns since March and April respectively.
Notwithstanding the HomeBuilder expiry, support from low interest rates and rising housing prices are supporting approvals. Even with the bring-forward effect from HomeBuilder now unwinding, private sector detached approvals are almost 40% higher than pre-pandemic levels. Unit approvals were less supported by these factors, but have lifted from last year's depths where the pandemic was a significant headwind on demand.
Despite the return of lockdowns, New South Wales (7%) and Victoria (9.6%) were key drivers of the rebound in house approvals in August, with South Australia (16.5%) also contributing. Queensland and Western Australia are recalibrating from their HomeBuilder-driven highs.
Alteration approvals showed renewed strength in August, rising by 10%m/m — to be only slightly below their recent peak. As with approvals for new builds, alterations are being supported by easy financing conditions and a robust housing market. More time at home in response to the pandemic has also been a factor in people making improvements to their homes.
Building Approvals — August | Insights
Dwelling approvals rebounded in August despite the return of lockdowns and the winding down of policy supports. Beyond the lockdown disruptions that restricted activity on sites more than in earlier lockdowns, capacity constraints emerging from the elevated pipeline of work that has accumulated could be a limiting factor on approvals.