HIA Economics Group Research Note
Residential Building Approvals: profile by type and geographyPage 3
Detached house approvals
62% of total approvals compared with ten year average of 59%
Showing signs of an improving trend
Geographical drivers of NSW and WA
Detached house approvals, while accounting for the majority share of the total, have endured a declineover the past three years. The level at which they most recently troughed was the lowest since the sharpdrop that followed the introduction of the GST. As suggested by the table above however, there appear tobe greenshoots of a recovery (although with a very long way to go) emerging on a national level.
Approvals in the July 2013 ‘quarter’ were 11.7 per cent higher than (the very low
base) in the same period12 months previously. This aggregate improvement has been driven by the larger markets of NSW andWA, where detached house approvals increased by 19.1 per cent and 61.1 per cent, respectively. Further context is warranted here; in NSW the improvement is off a very low base
the result of a decade-longdecline, similarly in WA the base is very low as approvals fell sharply in mid-2012 due to problemsstemming from the state
s amended building act. While Queensland recorded a 2.2 per cent annualdecline in the July 2013 quarter, the broader trend appears to be that the decline which commenced in late2008 has at least found a floor. Victoria and Tasmania are showing continued declines, with approvals inthe July 2013 quarter down by 6.7 per cent and 0.5 per cent, respectively, from the level 12 monthspreviously. In the two territories the quarter-on-quarter results were also in the red; -23.7 per cent in theNT and -5.6 per cent in the ACT.
Semi-detached and townhouse approvals
15% share compared with ten year average of 12%
Currently trending upwards
Broad-based improvement, SA and Tasmania the exceptions
Approvals for the lower density product of semi-detached, row or terrace houses and townhouses accountfor a sizeable 15.4 per cent of total approvals. As indicated by the table above this is a segment that hasexhibited quite broad-based growth. Most jurisdictions have seen approvals in this category start to trendhigher in just the last 6-12 months. The two exceptions have been SA and Tasmania, where an overalldownward trend has persisted for two years in both states. While the table above shows a marginal rise of 1.7 per cent in the July 2013 quarter compared with the July 2012 quarter in SA, it would be pre-emptive tolabel this as heralding a turnaround in the prevailing trend of decline. Looking at how the other states andterritories fared across these periods; approvals more than doubled in the ACT and in WA (up by 253.0 per cent and 123.5 per cent, respectively), the next strongest increases were in the NT (+75.0), Victoria (+52.1per cent), Queensland (+51.7 per cent), and NSW (+49.7 per cent). Approvals in this category declinedby 43.9 per cent in Tasmania.
Approvals for units in 1 or 2 storey buildings
2% share compared with ten year average of 3%
Most recent trend of rapid expansion may be showing signs of slowing
Trend of expansion has been geographically broad based, SA and ACT the exceptions
Out of total approvals, this lower medium-density product accounts for a very small share. Nationally thiscategory has experienced large swings in the past four years. A broad perspective shows that currentlevels are still historically high, with approvals in the 12 months to July 2013 87.3 per cent higher than inthan the previous 12 months. This situation has largely been driven by developments in the larger easternseaboard states as well as in WA. Indeed all jurisdictions bar SA and the ACT experienced strongincreases in approvals levels in the 12 months to July 2013 compared with the previous 12 months.