Residential property developers keen for stimulus to spur home building as approvals flatline

Hopes of grants grow for first home buyers looking to build their own property and for home renovators.

The growth in house approvals, by 3 per cent, was likely a continuation of building applications from early March gaining approval and not representative of new demand in April. Picture: AFP

Residential property developers will welcome any federal government stimulus of the housing sector in the wake of the coronavirus crisis as the number of new building approvals held steady through the month of April despite a fall off in unit approvals.

Stimulus measures for the housing market are slated to be unveiled this week with both first home buyers looking to build their own property and home renovators expected to receive grants to keep the construction industry moving.

New data released from the Australian Bureau of Statistics on Wednesday showed the estimated number of private sector housing approvals rose 0.8 per cent through the height of the pandemics grip in April. The change was equivalent to a 2.7 per cent rise in seasonally adjusted terms.

Director of construction statistics at the ABS Daniel Rossi said the data follows the trends set in recent months.

“These results are consistent with leading indicators in early 2020, prior to the onset of the COVID-19 pandemic restrictions. Building approvals typically lag early indicators of housing demand, such as new home sales and new loan commitments,” Mr Rossi said.

Stockland chief executive communities Andrew Whitson said creating new homes and apartments was one of the most important job multipliers in the Australian economy and acts as a significant booster to the broader economy.

“We would welcome any demand stimulus measures to support the housing and construction market, as rising levels of unemployment and a decline in projected population growth place downward pressure on buyer confidence,” Mr Whitson said.

“A clear stimulus for the housing construction sector is a powerful measure to help restart the Australian economy and support a million jobs.”

Total dwelling approvals for the month were up 1 per cent according to the ABS, led by more than 10 per cent gains in the ACT (13.2 per cent) and Northern Territory (10 per cent).

In terms of trends in residential housing, NSW approvals rose 2.2 per cent, WA was up 0.8 per cent and Victoria increased 0.7 per cent. Declines were recorded in SA (2.5 per cent) and Queensland (0.5 per cent).

Approvals expected to deteriorate

BIS Oxford Economics economist Maree Kilroy said that the April building approval figures were better than expected with total dwellings falling only 2 per cent on the previous month in seasonally adjusted terms.

The growth in house approvals, by 3 per cent, was likely a continuation of building applications from early March gaining approval and not representative of new demand in April, she said.

All major states saw growth in both houses and attached dwelling, with NSW the exception. But there was a sizeable correction in new high density approvals in NSW that forced national attached dwelling numbers into the negative.

“Dwelling approvals are expected to deteriorate over the coming months with all demand channels adversely impacted by the COVID-19 shock. Weaker off-the-plan apartment and greenfield land sales lead this further decline,” Ms Kilroy said.

“The federal government has indicated that targeted stimulus for new dwellings is on the way, but it likely won’t show through in the approval data for at least a few quarters,” Ms Kilroy said.