Private housing approvals hit record peak

The rush to secure a grant under the Morrison government’s HomeBuilder program has led to a fresh peak for house approvals in March, while the construction industry remains close to a record expansion.

The number of private sector houses approved edged up 0.1 per cent to 14,117 to a new record high in March, to stand 60.9 per cent higher than a year earlier, Australian Bureau of Statistics figures show.

The HomeBuilder program ended in March, but the government has since extended the deadline to begin construction by an additional 12 months.

“The rush to meet the deadline for the HomeBuilder subsidy at the end of March has likely brought residential approvals for new buildings and additions forward which will likely result in some softness in the months ahead,” AMP Capital chief economist Shane Oliver said. 

“However, the surge in approvals points to a significant rise in dwelling construction activity over the remainder of this year.”

While the Australian Industry Group/Housing Industry Association performance of construction index eased 2.7 points in April, at 59.1 it indicates the sector remains comfortably in expansion territory.

The index reached a record high in March.

“Australia’s construction sector continued to power ahead in April led by house building and engineering construction,” Ai Group head of policy Peter Burn said.

“Across the industry, employment and new orders were both higher in April.”

HIA economist Tom Devitt said the uptake of the Morrison government’s HomeBuilder scheme had beaten all expectations.

“The extension of HomeBuilder’s commencement deadlines means builders will be able to meet much more of this record demand over the coming year and fewer home buyers will have to suffer the disappointment of cancellation due to capacity constraints,” Mr Devitt said.

Overall building approvals granted in March soared by 17.4 per cent to 23,176, fuelled by a massive increase in apartment commitments.

This was the second highest on record and only exceeded by the November 2017 result.

Economists had expected a three per cent rise in the month. 

This increase was driven by a 63.6 per cent jump to 8563 in the volatile ‘private sector dwelling excluding houses’ component of the report.

BIS Oxford Economics economist Maree Kilroy said the strength in the residential market is broad.

“Underpinning new housing demand is ultra-low borrowing costs, preference shifts, elevated household savings and rising property turnover,” she said.

“These fundamentals will persist and prevent a sizeable correction for house approvals nationally post HomeBuilder as we move deeper into 2021.”

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