March building approvals the second-highest on record

March building approvals the second-highest on record

Apartments in Melbourne. Photo courtesy of Mitchell Luo via Unsplash.

A surge in construction activity for units and townhouses has pushed national building approvals to their highest levels seen in more than three years, with the bulk of growth in March coming from the two most populous states of New South Wales and Victoria.

Figures released today by the Australian Bureau of Statistics (ABS) show the seasonally adjusted estimate for total dwellings approved rose 17.4 per cent to reach 23,176.

Month-on-month building approvals growth for apartments and townhouses was markedly higher than for houses at 63.6 per cent versus 0.01 per cent, but units are really playing catch-up with a housing boom that has been in full swing since June 2020.

Monthly housing approvals started to climb steadily in mid-2020 and are now up 72 per cent since then at 14,117 approvals in March.

For apartments and townhouses however, monthly growth has been more eratic with a sharp drop-off in January to levels not seen since July 2012, only to pick back up and more than double in the space of two months.

"The total number of dwellings approved in March was the second highest recorded, only exceeded by the November 2017 result," says ABS director of construction statistics Daniel Rossi.

"The number of private sector house approvals also remained at elevated levels due to HomeBuilder, edging up 0.1 per cent to a new record high in March."

Total dwelling approvals rose in New South Wales (26.9 per cent), Victoria (24.7 per cent), Queensland (12.1 per cent) and South Australia (3.5 per cent), in seasonally adjusted terms.

The value of total building approved increased 36.3 per cent to reach a record high of $15.6 billion, driven by a 59.4 per cent increase in the value of non-residential building to the highest level recorded of $6.66 billion.

The data comes after Reserve Bank of Australia (RBA) Governor Philip Lowe revised GDP growth forecasts to 4.75 per cent this year and 3.5 per cent over 2022.

"A pick-up in business investment is expected and household spending will be supported by the strengthening in balance sheets over the past year," Governor Lowe said.

"Housing markets have strengthened further, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers," he said.

"Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."

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