For the first time in 18 months, residential building approvals have exceeded market expectations. Despite falling month-on-month throughout most of 2019, approvals have gone up by 2.1% on average in December according to the Australian Bureau of Statistics (ABS). Current approvals are still 19.1% lower than the previous year, demonstrating that a continuing lack of supply will remain for some time yet.
“The trend for the total dwelling approvals series continued to rise at the end of 2019,” ABS director of construction statistics Daniel Rossi said.
December’s increase was driven by a rise of 4.9% in the “other dwellings” category that includes townhouses and apartments. Private sector house approvals were up by 0.3 per cent.
Most states and territories saw a rise in dwelling approvals, most notably Victoria, where apartment approvals surged to 6.1 per cent, providing the biggest boost to the national result. The Northern Territory rose 4.7 per cent, Australian Capital Territory one per cent, with both New South Wales and South Australia up by 0.5 per cent.
Approvals for private sector houses increased in Western Australia by 2.0 per cent, Victoria 1.1 per cent, Queensland 1.1 per cent and South Australia 0.5 per cent but fell 2.1 per cent in New South Wales in trend terms.
BIS Oxford Economics economist Maree Kilroy pointed out that all states and territories are expected to see growth over the next 12 months, driven mostly by the house and medium density segments of the market.
“Looking ahead, the positive momentum that has developed in the established property market and the flow through of a range of stimulus measures to new dwelling demand sets the scene for a recovery in approvals over 2020,” Kilroy said.
The latest approvals figures and the continued turnaround in Australia’s housing markets come as the RBA decided to leave the cash rate unchanged on Tuesday, amid a number of unusual economic influences set to temporarily impact domestic growth, including the recent bushfires and the Coronavirus outbreak.
“There are continuing signs of a pick-up in established housing markets,” governor Philip Lowe said.
For those considering buying, this is an extremely positive sign that the market is rebounding.