Building approvals in November rose 12 percent, the first increase in 23 months. The numbers have been helped by a 23 percent rise in high-density approvals, with a significant rise in New South Wales approved apartments. “The rise was driven by approvals for private sector dwellings excluding houses, which increased by 2.9 per cent in November,” said Daniel Rossi, Director of Construction Statistics at the ABS. “However, private sector houses fell by 0.3 percent.”
Across the states and territories, dwelling approvals rose in South Australia (4.2 percent), New South Wales (1.6 percent), Victoria (0.7 percent) and the Australian Capital Territory (0.3 percent). Decreases were recorded in the Northern Territory (2.6 percent), Western Australia (1.9 percent) and Queensland (0.4 percent), while Tasmania was flat, in trend terms.
JPMorgan economist Tom Kennedy says the data shows the drop in approvals has now stabilised. “The data have been particularly volatile of late, but through the noise, there are signs that building approvals are stabilising following a period of prolonged weakness,” he says.
Maree Kilroy from BIS Oxford Economics says lower interest rates and easier lending is starting to drive the market once more.“The freeing up of credit, as seen in recent new mortgage loan growth, is starting to have a positive effect on new dwelling demand, with the increased churn of established dwellings encouraging upgraders towards new construction,” she says.
Despite the monthly increase, construction approvals remain 12 percent lower than last year this time. Most market analysts expect this year to see a rebalancing of supply and demand, leading to house price rises and more building activity.