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According to the data released by the Australian Bureau of Statistics (ABS), the total number of dwellings approved fell 0.1 per cent in March (seasonally adjusted terms) after it rose 3.9 per cent in February.
This was driven by a 2.8 per cent decline in approvals for private sector houses (falling to 8,312 approvals) after an 11.3 per cent increase in February, according to ABS head of construction statistics Daniel Rossi.
“Private sector house approvals remain 15.0 per cent lower than March 2022,” Mr Rossi said.
“Private sector dwellings excluding house approvals increased 5.6 per cent in March, following a 9.7 per cent decrease in February.
“This is the sixth consecutive month where the trend result has fallen for total dwellings approved.”
Looking at the states, total dwelling approvals fell in Tasmania (42.1 per cent), South Australia (19.1 per cent), and Queensland (6.7 per cent).
However, Western Australia, NSW, and Victoria all recorded increases in total dwelling approvals at 27.2 per cent, 3.1 per cent, and 1.7 per cent, respectively.
Private sector house approvals declined in all states excluding Western Australia (which rose by 8.7 per cent in March). In NSW, approvals for private sector houses fell by 4 per cent, followed by Queensland (3.9 per cent), Victoria (3.8 per cent), and South Australia (0.1 per cent).
This follows the ABS’ latest Lending Indicators data revealing the number of owner-occupiers taking out loans to build a home fell to the lowest number recorded for the dataset, at 2,661 in March 2023.
This marked the second month in a row that record-low numbers of owner-occupiers have turned to lenders for a construction loan, down 2.4 per cent on February figures.
Housing Industry Association (HIA) senior economist Tom Devitt stated the first quarter of this year saw the lowest number of building approvals in over a decade, right as population growth reaches record highs.
“This continues the long-lagged response of Australian home buyers to the RBA’s interest rate hiking cycle, with further declines expected in the coming months,” Mr Devitt said.
“The adverse impact of last year’s cash rate increases is still to fully flow through to the official data. Further cash rate increases this year will have only added further weight to these declines.”
Mr Devitt further stated the combination of construction cost blowouts, labour uncertainties, higher compliance costs, and taxes on investors has resulted in multi-unit approvals stalling and reaching the lowest levels of approvals since 2012.
“These disappointing approvals numbers are occurring as population growth surges with the return of overseas migrants, students and tourists,” concluded Mr Devitt.
“This imbalance will see the affordability and rental crisis deteriorate further.”
[RELATED: Construction loan demand falls to new low]
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