Dwelling approvals jump to highest level since 2004 in December

Building approvals data for December has just been released by the Australian Bureau of Statistics which shows a positive upwards trend in the number of homes approved for construction.  On a seasonally adjusted basis dwelling approvals rose 2.2 per cent in December with 14,869 planned dwellings given the green light.  This is the second consecutive month of improved approval numbers and the highest monthly result since mid 2004.

Compared to the same time last year dwelling approvals are up a whopping 53.3 per cent.

The number of dwellings approved for construction has actually been trending upwards since bottoming in January ’09 at just 9,374 dwellings approved in that month (approvals hadn’t fallen that low since early 2001).

Number of dwelling approvals, National

The turnaround in the number of homes approved for construction provides some hope that housing supply may finally be heading in the right direction.  A big wild card is how the market will respond to the removal of government stimulus – the boost to the First Home Owners Grant has now been completely removed and interest rates are no longer at emergency lows.

The other major obstacles to a wholesale improvement in dwelling supply is the fact that developers are still finding it difficult to obtain finance – a factor that may not slow down the approvals process but does impact on the construction side with many developers required to have at least 100% pre commitment in development stock before finance is approved.  This is particularly the case for higher density developments, with the building of new units and townhomes well and truly underperforming the development of new houses.

Another factor that may keep the lid on the number of new dwellings approved is the high cost of land prices thanks to a less than strategic land release policy from most of the state governments and excessive government charges lumped onto developers by state and local governments.

Overall, I wouldn’t be surprised if we see a weakening in dwelling approvals over the next six months due to the reasons outlined above.

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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One Response to Dwelling approvals jump to highest level since 2004 in December

  1. TM February 5, 2010 at 5:19 pm #

    Hi,

    I am particularly interested in a real estate forecast for the Ettalong Beach area for 2010 and beyond. This is situated on the Peninsula as part of the Gosford local council area.

    Thanks

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