Home building approvals approach record highs

Building approvals rose by a ‘whopping’ 17 per cent in March, after a 60 per cent spike in apartment approvals complimented another slight lift in stand-alone houses.

The boom in home building approvals will drive a surge in construction activity into 2022.

Building approvals rose by a “whopping” 17 per cent in March to levels just shy of the all-time high in late 2017, after a 60 per cent spike in apartment approvals complemented another slight lift in stand-alone houses.

Monthly total dwelling ­approvals jumped to 23,176, 47 per cent above levels recorded in March 2020, according to the Australian Bureau of Statistics.

The final month of the federal HomeBuilder program saw a 0.1 per cent lift in the number of house building approvals, which advanced to a fresh peak of 14,117, up 60 per cent on a year earlier, the seasonally adjusted figures showed.

Economists now expect the number of house building ­approvals to fall away sharply, ­although the surge since the grant program was announced in June “will leave a legacy of a significant rise in dwelling construction activity over the remainder of this year”, AMP chief economist Shane Oliver said.

Housing Industry Association executive director Fiona Nield expected a “record volume of building work” through 2021 and into 2022, with more than 40,000 new detached homes to commence construction.

The surge in building has triggered labour shortages in key trades and boosted demand for construction materials, while ­interruptions to global supply chains have led to a sharp lift in costs. The value of approvals for renovations lifted by 7.3 per cent in March to be up by 47 per cent over the year, the data revealed.

CBA senior economist Krist­ina Clifton said low interest rates, strong growth in household ­incomes and an inability to spend money on overseas holidays had sparked more investment in the home, which was likely to ­continue.

 

“Our internal data shows lending for renovations is growing at a very strong pace,” she said. “We expect renovations ­activity to remain elevated through­out this year.”

Apartment approvals are ­typically volatile, given the lumpiness as large projects roll in and out of the data.

The surprisingly strong monthly lift was driven by a rise in approvals for high-rise apartments in Victoria, although over the three months to March multi-unit approvals were down 30 per cent versus the same period in 2020, Ms Nield said.

The HomeBuilder program has proved hugely successful, with the final number of grant ­applications for new builds or substantial renovations exceeding 121,000, or four times Treasury’s initial forecasts.

On April 17, the government extended the requirement that construction begin six months after receiving approval for the grant to 18 months.