Building approvals plummet 11 per cent

Yesterday’s release of building approval figures from the Australian Bureau of Statistics is further evidence that the new homebuilding cycle may have reached a ceiling, according to the Housing Industry Association (HIA).

Total dwelling approvals declined by 11.0 per cent in seasonally adjusted terms during September, to reach a thirteen-month low of just over 15,000.

Detached house approvals eased back by 3.0 per cent during the month, but remained 7.9 per cent higher than twelve months earlier.

Multi-unit dwelling activity was particularly weak during the month, with a 21.5 per cent reduction occurring compared with the previous month, and activity down by 34.2 per cent compared with the same period of 2013.

The figures provide further evidence that the national recovery in new homebuilding is likely to have passed its peak, HIA senior economist Shane Garrett said.

“Monthly approvals reached over 17,000 earlier in the year,” Mr Garrett said.

“During September, we barely hit 15,000,” he said.

“The reduction in new homebuilding is probably an indication of the patchy state of the labour market, as well as increased consumer woes post-federal Budget.”

Recent HIA research shows an annual requirement for 180,000 dwellings to be built each year.

“The fact that we seem to be drifting below this level of output again is a worrying sign,” Mr Garrett said.

“During the early days of the housing upturn, HIA had been vocal in its calls for policy to facilitate new housing supply to be delivered more readily,” he said.

“Unfortunately, yesterday’s data shows that we are again moving in the wrong direction in terms of new housing volumes.

“We need a more imaginative approach from policymakers, particularly around land supply and the delivery of housing infrastructure.”