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The ABS building approvals measure increased in July following two months of decline.
The Housing Industry Association noted that the “stellar rise” of 23.4 per cent in approvals for ‘other dwellings’ in July took this new building approvals component “within a whisker of its cyclical peak of 11,572 reached in May 2015”.
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“That drove the headline 11.3 per cent rise in total seasonally adjusted building approvals,” HIA chief economist, Dr Harley Dale, said.
“Looking through the inevitable monthly volatility, both ABS Building Approvals and HIA New Home Sales are signalling some further growth in ‘multi-unit’ construction, but a gradual decline in detached house building,” Dr Dale noted. “There is some further spark to semi-detached/townhouse dwellings — this is a market to keep a positive eye on.”
According to the HIA chief economist, the short-term horizon is narrow from a geographical perspective — “take away NSW in particular, but also Victoria and the light is not so bright.”
“You wouldn’t want anything to happen that derailed confidence in these two markets,” he warned.
The HIA has been forecasting a healthy short-term outlook for new home building for some time, while noting the relatively narrow base in terms of both geography and dwelling type.
Dr Dale said the July results don’t change the association’s view, but does flag the uncertain outlook the new home building sector faces especially due to the record pipeline of work yet to be started for medium/high density dwellings.
