Rise in building approvals signals positive momentum

The latest Building Approvals figures released by the Australian Bureau of Statistics (ABS) have revealed an increase of 6.3 per cent in the total number of dwellings approved in January to 16,579, following a rise of 1.7 per cent in December (seasonally adjusted).

According to the ABS, private sector houses rose 1.1 per cent to 9,042, following a 2.8 per cent fall in December, while private sector dwellings excluding housing also increased, up by 12.7 per cent to 7,213, softer than the 17.3 per cent rise in December.

Daniel Rossi, ABS head of construction statistics, said that the increase in the approvals for the latter drove up the overall monthly rise, bringing it to its highest level since December 2022.

In annual terms, the total dwelling units approved increased by 21.7 per cent, while private sector houses rose by 8.9 per cent and private sector dwellings excluding houses were up by a substantial 41.6 per cent.

There were mixed results across the states, with Queensland, Western Australia, and South Australia driving the overall rise with increases of 4.6 per cent, 3.3 per cent, and 2.9 per cent, respectively.

Meanwhile, falls in approvals were recorded in Victoria (down by 1.2 per cent) and NSW (down by 0.8 per cent); however, a significant number of apartment buildings approved in NSW helped drive the upward momentum over January and December.

Furthermore, the total residential building value rose 4.5 per cent to $9.04 billion to a record high in January, made up of a 5 per cent gain in the value of new resi builds approved, which hit $7.90 billion, and a 1.1 per cent rise in the value of alterations and additions (to $1.14 billion).

However, the value of approved non-residential building fell by 20.7 per cent during the month to $5.69 billion, following December’s surge of 19.7 per cent. Despite this, values were 11.3 per cent higher than in January 2024 and followed the second-highest value ever recorded in December.

Overall, the value of total building approved fell by 6.9 per cent (largely driven by the drop in non-resi building values) to $14.73 billion after an 8.9 per cent December increase.

HIA economist Maurice Tapang said these increases signal “positive momentum heading into the new year, with households slowly returning to the market and building new homes”.

“New housing approvals had been strengthening on the back of low levels of unemployment, recovering real wages and ongoing strong population growth, even before the first interest rate cut was delivered,” Tapang said.

“The rise in home building activity will be more evident in states and regions with lower land costs and lower taxes on new homes, while those with higher tax imposts will remain weak.

“Despite modest improvements in housing approvals, Australia continues to face a significant shortfall in housing supply.”

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

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

E-mail Adrian at: adrian.suljanovic@momentummedia.com.au