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The total number of dwellings approved rose 4.2 per cent month over month in October to reach an almost two-year high.
New figures from the Australian Bureau of Statistics (ABS) have shown that total dwelling approvals rose 4.2 per cent over the month to October 2024, to 15,498, the highest since December 2022.
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The rise was driven by an increase in apartment developments approved in NSW and Victoria, according to ABS head of construction statistics, Daniel Rossi. Indeed, private dwellings excluding houses shot up 24.8 per cent to 5,859, which is 7.1 per cent higher than a year ago. However, apartment developments (and particularly high-rise construction) are a particularly volatile figure.
Conversely, approvals for private sector houses fell by 5.2 per cent in October to 9,191, after reaching a two-year high in September (when home approvals rose 4.1 per cent).
Despite the fall nationally and across most states, private sector house approvals remained 2.4 per cent higher than in October 2023. South Australia was the only state to see growth in October, with a 1.0 per cent rise.
The annual dwelling approval growth rose to 6.1 per cent, but the October figures showed that the approval numbers have been falling. In September 2024, total dwelling numbers increased by 5.8 per cent, highlighting slowing growth in October.
“Multi-units would need to pick up more strongly in order to achieve the Australian Government’s target of 1.2 million homes over five years,” said Housing Industry Association (HIA) economist Maurice Tapang.
Victoria tops charts for dwellings approved
Victoria was the state with the highest number of dwelling units approved in October, at 5,282, an 8.9 per cent monthly climb.
However, approvals recovered strongly in NSW, with approvals jumping to 3,939 – 34.8 per cent higher month over month.
Tasmania was the only other state to see a monthly rise in approvals, up 3.9 per cent, to 215.
At the other end of the spectrum, Western Australia saw the largest drop in approvals, decreasing 11.9 per cent over the month to 1,776, while total dwellings approved in Queensland fell 14.1 per cent to 3,001. South Australian approvals were down by 0.3 per cent over the month, to 1,129.
Value of buildings approved falling
While the volume of new buildings approved has risen, the value of total buildings approved fell 3.7 per cent to $13.21 billion, following a 1.2 per cent rise in September.
Non-residential buildings drove the decline, with their total value dropping 13.4 per cent to $4.89 billion, following a 3.7 per cent September rise.
Total residential building value rose 3.2 per cent to $8.33 billion (made up of a 4.4 per cent rise in new residential buildings to $7.21 billion and a 4.2 per cent fall in alterations and additions, to $1.12 billion, in seasonally adjusted terms).
Steady interest rates driving approvals
The stabilisation of interest rates was recognised as a large driver of continued increases in building approvals.
“It has been more than a year since the Reserve Bank of Australia (RBA) last raised interest rates,” said Tapang.
“Unchanged interest rate settings has provided some degree of certainty for consumers.
“Households are returning to new home building despite there being no cut to the cash rate. This is because unemployment remains at very low levels, while housing demand remains very strong. Low unemployment, unchanged interest rates, stable growth in materials prices and a return to normal build times are helping lift up the market from its recent trough.”
However, the Commonwealth Bank of Australia (CBA) said the cash rate trajectory could further impact affordability.
It said that a lift in supply (listings) and moderating sales (demand) have so far driven the slowing in home prices across Australia.
“We expect further modest performance until interest rate relief could shift demand higher,” the lender said. The bank currently expects interest rates to start falling in February 2025.
CBA said the outlook for home prices and building approvals in 2025 is uncertain and conditional on the path of the cash rate.
“At this stage we are expecting home prices to lift by 5 per cent in 2025, but the risk sits with a softer outcome given recent momentum and the growing shift from a sellers to buyers market,” the bank said.
“We do also expect approvals to continue to recover from here given the recent focus by federal, state and local governments to lift housing supply, as well as the easing in monetary policy in 2025.”
[Related: Apartment surge drives approval growth]
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