April building approvals dip after March rise

April’s Building Approvals data released by the Australian Bureau of Statistics (ABS) has revealed a drop of 0.3 per cent in total dwellings approved, down from the 2.7 per cent rise in March (seasonally adjusted).

The number of total dwelling units approved dropped to 13,078 during the month (however, this represented an annual rise of 3.5 per cent), down from 13,122 a month prior.

According to the ABS, the seasonally adjusted estimate for private sector house approvals fell 1.6 per cent following a 4 per cent rise in March, while private sector dwellings excluding houses approved fell 1.1 per cent after a 5.7 per cent rise.

On a state-by-state basis, Tasmania led the declines for April with a drop in total approvals of 16.1 per cent, followed by NSW at 4.5 per cent and Western Australia at 0.9 per cent.

Meanwhile, South Australia and Queensland recorded increases to total dwellings approved at 13.9 per cent and 5 per cent, respectively, while approvals for Victoria were flat during the month.

NSW recorded the largest decline for private sector house approvals in April at 5 per cent, followed by Victoria (2 per cent), Queensland (0.2 per cent), and South Australia (0.1 per cent) while an increase was recorded in Western Australia of 3.5 per cent.

The value of total building approved fell to $12.4 billion (3.8 per cent) after the March rise of 13.8 per cent, with the value of total residential building down by 3.2 per cent (to $7.28 billion).

This was comprised of a decrease in new residential building of 3.8 per cent and a 0.4 per cent rise in alterations and additions.

Moreover, detached house approvals fell 1 per cent and higher density dwellings dropped 7.5 per cent annually.

Commenting on the data, Master Builders Australia chief economist Shane Garrett said the April data revealed a “concerning trend” which threatens the National Housing Accord’s target.

“The new National Housing Accord kicks off in less than five weeks’ time and envisages 240,000 new homes each year. However, the past 12 months have seen less than 163,500 new home building approvals across Australia.

“Just 60,600 higher density dwellings were approved over the year to April. This is the lowest total for any 12-month period since September 2012 almost 12 years ago.

“The challenge is massive, not impossible, but requires a 47 per cent increase in the volume of new home building output,” Garrett said.

Chief executive of Master Builders Australia, Denita Wawn, suggested that “some in government have left the handbrake on” in terms on housing production.

“The hurdles are clear to everyone, approval delays, tradie shortages, material cost inflation, out of touch industrial relations changes, inefficient regulation and more.

“We’re beginning to sound like a broken record, but the situation is critical. If we don’t clear the obstacles stopping builders from getting on with the job, we won’t have any hope of reaching the 1.2 million new home target by 2029,” Wawn stated.

Housing Industry Association (HIA) senior economist Tom Devitt said these depressed approvals volumes “don’t foreshadow a rapid recovery from the weakest volume of new home commencements in the 2023–24 financial year, in over a decade”.

“At the same time, Australia is seeing record population growth and acute shortages of housing that are expected to persist for at least the next few years.

“With recent inflation data casting further doubt on the prospect of any reduction in interest rates this year, government policymakers need to pull the levers within their reach,” he said.

Construction work down

The ABS also released its March quarter 2024 preliminary estimate statistics on Construction Work Done, Australia, which revealed a quarterly drop of 1.2 per cent in the value of residential construction work, and an annual drop of 2.8 per cent to approximately $19.5 billion.

Commenting on the construction work statistics, Commonwealth Bank of Australia economist Harry Ottley said that widely discussed constraints in the construction industry have “created significant delays in projects being completed”.

“As a result, there is a large pipeline of work in the residential sector. But, as we have noted previously, there is uncertainty around how quickly the pipeline will be worked through, or how much of it will be completed.

“We thought weaker approval numbers may have created additional capacity for the sector to work through the backlog of work, keeping activity resilient. However, it appears weak approval numbers is seeing less new work commenced and progress on the now falling pipeline has not been enough to offset this,” Ottley said.

[RELATED: High-density approvals reach 12-year low]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

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