2019 was a bumpy year for the Australian building and construction industry with approvals down by nearly 20 per cent compared to 2018, but newly released data from the Australian Bureau of Statistics (ABS) shows the end of the decade closed on a high note.
The ABS released its monthly building approvals data for the end of last year in early February covering all states and territories, with approvals presenting mostly positive results across the nation.
‘The start of 2019 was tough for the residential building industry with the credit squeeze, falling house prices and uncertainty surrounding the federal election putting a dampener on confidence,’ says HIA Economist, Angela Lillicrap.
‘The market did improve in the final months of 2019, suggesting that the building industry will not continue to constrain economic growth in 2020.’
New home building stabilised at relatively strong levels. Detached house approvals have a three-month annualised level of 101,240 approvals, a very robust level according to HIA Economists, and similar to building volumes in 2018.
‘Multi-unit approvals have been leading the declines and are 25.0 per cent lower than they were in 2018,’ Angela says. ‘Continued growth in house prices will assist in bringing investors back to the market as well as support an increase in activity across the broader economy.’
Angela adds it is unlikely the same boom of investment as experienced in the previous cycle will occur due to restrictions on foreign investors.
‘Constraints on access to credit will continue to be the biggest impediment to future growth in building approvals,’ she says.
In seasonally adjusted terms, building approvals for the December 2019 quarter increased in Victoria by more than 26.7 per cent and by more than 6.9 per cent in South Australia.
New South Wales and the Northern Territory both saw similar numbers of around 1.5 per cent, while the remaining states and territories saw declining approvals.
Tasmania just dipped into negative figures at -0.8 per cent but Western Australia experienced the lowest rate at -6.8 per cent.