The approvals of new apartments and houses rose at their fastest monthly rates on record in February, giving a boost to Australia’s housing pipeline.
Total dwelling approvals leapt 43 per cent from January to a seasonally adjusted total of 18,675, Australian Bureau of Statistics figures showed on Thursday.
The monthly total was not a record – it was only the highest figure since June’s 19,457 – but the rate of gain, driven by a record doubling of new attached dwelling approvals and a highest-ever 15.6 month-on-month increase in detached homes, principally reflected a bounce back after a weak start to the year.
“The strong rebound comes off a very weak January result, which was impacted heavily by omicron absenteeism slowing the approval administration process,” BIS Oxford Economics principal economist Tim Hibbert said.
“We expect further trend growth in dwelling approvals, but at a much more modest rate in the following months.”
Approvals of new apartments, townhouses and semi-detached dwellings doubled to 8331 nationally from January’s 4067; detached house approvals jumped to 10,344 from 8948.
Approvals jumped 49 per cent in NSW, a record 91 per cent in Victoria and 36 per cent in SA, a 3½-year high. They rose 8 per cent in WA and 12.2 per cent in Tasmania but fell 14.6 per cent in Queensland.
Approvals over the year to February – a less-volatile measure than monthly numbers, which jump around – paint a picture of the apartment pipeline growing. However, the growth is unlikely to last long enough to resolve Australia’s predicted shortfall of housing, which the National Housing Finance and Investment Corporation estimates will reach 163,400 dwellings by 2032.
The rolling 12-monthly total of attached dwelling approvals rose to 80,252, up 25 per cent from a year earlier and the highest since 81,551 in April 2019. The year-on-year total is trending higher.
The 12-monthly total of standalone house approvals, by contrast, is weakening. Although February’s total of 143,056 was 11.4 per cent higher than the corresponding period of the previous year, the approvals were up 46 per cent year-on-year for August.
But ANZ economist Adelaide Timbrell said the current growth was unlikely to be sustained as it was during the last boom in apartment investment.
“When you look at unit approvals, it’s a short-lived spike, not the start of a boom,” Ms Timbrell said.
Immigration would resume and population growth would increase demand for apartments, but borrowing costs would dampen the price growth that prompted developers to build new apartments, she said.
“We’re likely to see higher interest rates, which will constrain how much people can bid on property and how much those property values are going to hold,” Ms Timbrell said.
The strains of a home-building sector under pressure were also clear in Thursday’s numbers.
The average cost of approved houses surged 22 per cent on average nationally over the 12 months to February, reflecting the labour and materials shortages that have been worsened by recent flooding in Queensland and NSW – and which are threatened further, in the case of a material such as timber, by the war in Ukraine.
“Cost pressures continue to mount,” Mr Hibbert said. “Increased delays in the delivery of construction work are to be expected over the remainder of 2022.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/new-apartment-approvals-surge-at-fastest-pace-on-record-20220331-p5a9p0