Residential building approvals rise as market confidence returns

The Australian housing market is showing signs of renewed confidence, with residential building approvals increasing in July 2024, according to HIA Economist Maurice Tapang.

Key points from the Australian Bureau of Statistics’ monthly building approvals data include:

Overall residential building approvals rose by 10.4% in July 2024.
Detached house approvals increased by 0.3%.
Multi-unit approvals surged by 33.7%.
Nationally, 9,350 detached homes and 5,440 multi-units were approved for construction.
House approvals over the three months to July 2024 were 2.3% higher compared to the previous three-month period, and 12.6% higher than the same time last year.

Mr Tapang noted that the increase in detached home approvals is primarily driven by sustained improvements in Western Australia, Queensland, and South Australia, while New South Wales and Victoria remain more constrained.

Across capital cities, house approvals in the three months to July showed varying increases:

Perth: 19.8%
Adelaide: 13.7%
Brisbane: 10.6%
Sydney: 2.8%
Melbourne: 2.0%

Mr Tapang attributed the uplift in home building approvals outside Sydney and Melbourne to strong economic conditions and relatively lower costs of delivering new homes.

He also highlighted several factors contributing to the improved market confidence:

Stable interest rates for almost ten months
Stabilized materials prices and build times
Low unemployment rates
Strong demand for homes, especially outside southeastern capitals

“Policymakers that ease the tax and regulatory burdens on new homes will also help in lowering the cost of delivering a completed home to market,” Mr Tapang concluded.

The data also showed significant year-on-year increases in house approvals for the three months to July 2024 in Western Australia (57.6%) and Queensland (22.1%), while some jurisdictions recorded declines, including Tasmania (-19.3%) and the Australian Capital Territory (-12.4%).