New dwelling approvals have declined for a fourth consecutive month as the surge in detached housing, propelled by the federal government’s HomeBuilder stimulus, continues to drop out of the system.
Australian Bureau of Statistics figures for July show a seasonally adjusted total of 17,601 dwelling approvals, a dip of 8.6 per cent on June’s result and marked the lowest monthly total since January.
Building approvals were weighed down in part by a 24 per cent decline in detached house approvals from their peak of 15,443 in April to 11,671 in July.
The monthly decline in the total number of dwellings was broad-based, with private sector houses falling 5.8 per cent and approvals in private sector dwellings, excluding houses, falling 12.3 per cent.
Housing Industry Association economist Angela Lillicrap said the latest date indicated that the majority of HomeBuilder projects had now moved through the approvals process and were set to begin construction in the coming months.
Dwelling approvals
^Source: ABS, AMP Capital
Across July, the largest falls were in South Australia, down by 17.1 per cent, and Tasmania, 15.3 per cent.
Queensland, benefiting particularly from interstate migration, was the only state to record an increase in dwelling approvals with a 9 per cent rise.
Private house approvals in Queensland also rose, up 8.3 per cent in seasonally adjusted terms.
The return of lockdowns across parts of New South Wales and Victoria meant approvals for private sector houses fell 4.2 per cent and 7.3 per cent respectively.
The rebounds from last year’s disruptions combined with major stimulus from ultra-low interest rates and HomeBuilder are now seemingly fading.
Detached-house approvals remain 43.2 per cent up on the same quarter last year but the rate of decline has now increased after falling by half the rate, 10.1 per cent, in June.
ANZ economist Adelaide Timbrell said the numbers were likely to fall.
“While the wind-back of fiscal support was always expected to lead to a fall in residential building approvals, the decline has been faster in recent months than the market expected,” Timbrell said.
“We know much of the increase in approvals represented a bring-forward of activity, so we expect to see more declines.”
AMP Capital chief economist Shane Oliver shared that sentiment and said the increased rate of decline meant that the outlook for building approvals leading into 2022 was less certain.
“Next year risks seeing a slump in home building reflecting the pull forward of activity due to HomeBuilder, reduced demographic demand after two years of zero immigration and the risk that the latest lockdowns impact homebuyer sentiment,” he said.
▲ The HomeBuilder scheme has estimated to have created over $30 billion of construction projects.
Between March 2020 and March 2021 dwelling approvals have posted an 84 per cent increase.
Monthly approvals have since declined 25 per cent but are still up 21 per cent year on year and are sitting 8.6 per cent higher than their pre-pandemic level.
Private house approvals remain 28 per cent higher than July 2020 and 36 per cent higher than July 2019.
Construction for the foreseeable future remains strong, with more than 121,000 HomeBuilder grant applications lodged, four times more than what was initially expected.
As a knock-on effect, almost four in five builders are now reporting “significant delays” in being able to secure concreters, joiners and bricklayers ,and an increase of up to 10 per cent in the cost of materials and specialist trades or labour, according to lobby group Master Builders.
Residential property construction times have also doubled across 2021.
A single-storey dwelling, which required six to eight months to build in 2019-2020, now requires between 12 to 16 months, while a double-storey home, which had previously taken 10 to 12 months, is now taking 14 to 20 months to complete.
Article Source:www.theurbandeveloper.com
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