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{{propApi.successMessage}} {{region}} Change locationImpact of rate rises still to hit building approvals
Impact of rate rises still to hit building approvals
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The Australian Bureau of Statistics today released its monthly building approvals data for October for detached houses and multi-units covering all states and territories.
“Despite the decline in approvals in recent months, they are yet to reflect the adverse impact of rate rises that commenced in May 2022,” added Mr Devitt.
“Building approvals have been sustained in recent months by the record number of home sales prior to the first increase in the cash rate that still haven’t been approved, much less commenced construction.
“Sales in and financing of new homes have fallen significantly in recent months, but this is yet to flow through to the number of homes gaining council approval.
“The full impact of the rate rise will not be observed in approvals data until 2023 when the pool of earlier sales is exhausted.
“Building approvals for detached housing declined by 2.4 per cent in October compared to the previous month leaving them 11.8 per cent lower for the three months to October 2021.
“Multi-unit approvals also declined in the month of October, down by 11.4 per cent, though on a quarterly basis, this is up by 13.9 per cent on pre-pandemic levels.
“Affordability constraints in the detached market, combined with tight rental markets and returning overseas migrants, students and tourists, are set to support demand for more affordable, higher density living.
“This means the multi-units market is set to continue strengthening in the face of higher interest rates and a cooling detached market.
“A large pipeline of home building work is sustaining employment across Australia and continues to obscure the impact of rising interest rates on demand for housing.
“The 2.75 per cent increase in the cash rate will bring this pandemic boom to an end, but this is yet to be reflected in approvals data,” concluded Mr Devitt.
In seasonally adjusted terms, total building approvals by state were mixed, with the declines led by Queensland, down by 22.1 per cent in October compared to the same month in 2021. This was followed by Western Australia (-20.1 per cent) and New South Wales (-9.4 per cent), with increases in South Australia (+18.8 per cent) and Victoria (+6.0 per cent). In original terms, total building approvals doubled in the Northern Territory (+104.5 per cent), with declines in the Australian Capital Territory (-21.8 per cent) and Tasmania (-8.7 per cent).
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