New building approval numbers finally show promise

Finally, after a long period of seeing building approval numbers decline, a shot of life looks to have been injected into the new home market, with new data from the Australian Bureau of Statistics (ABS) showing an increase in builds on the way.

Building approvals for new homes increased by 5.5 per cent in the month of May, with 14,180 residential building approvals in May being 9,260 detached house approvals and 4,920 multi-units.

HIA chief economist Tim Reardon said detached house approvals increased by 1.3 per cent in May 2024 and had been slowly strengthening in recent months.

“Detached approvals in the three months to May 2024 are up by 10.0 per cent compared to the same period in the previous year.

“Multi-unit approvals increased by 14.3 per cent in May from very low levels in recent months.

“Over the three months to May 2024, multi-unit approvals remain 19.1 per cent lower than in the same period in the previous year.”

The ABS data shows there have been 163,760 total dwelling approvals over the most recent 12 months to May 2024.

This is well below the 240,000 new homes needed each year from July 1, 2024 to achieve National Cabinet’s goal in the Big Build.

Mr Reardon said the low approvals numbers indicated a slow start to building 1.2 million homes over the next five years.

“Increasing the number of homes built will be necessary to address longstanding housing shortages.

“Addressing tax, planning, land and regulatory constraints will be necessary to increasing the supply of homes in Australia.”

In seasonally adjusted terms, approvals in the three months to May saw an increase of 51.1 per cent in Western Australia compared to the same time in the previous year.

This was followed by Victoria which saw a 10.0 per cent increase with the other jurisdictions recorded declines over the same period, led by the New South Wales at minus 21.6 per cent, followed by South Australia at minus 6.0 per cent and Queensland down by 4.8 per cent.

In original terms, the Australian Capital Territory recorded a 33.4 per cent increase in approvals in the three months to May 2024 compared to the previous year.

Approvals over the same period fell in the Northern Territory by 34.3 per cent and in Tasmania down by 16.3 per cent.