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{{propApi.successMessage}} {{region}} Change locationBuilding approvals down 22 percent. Cash rate impact still to come.
Building approvals down 22 percent. Cash rate impact still to come.
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The Australian Bureau of Statistics today released its monthly building approvals data for December for detached houses and multi-units covering all states and territories.
“This data included a 2.4 per cent decline in house approvals in December 2022, to 8,989, the second weakest monthly performance in the last two-and-a-half years.
“Much of the decline between 2021 and 2022 was the expected consequence of the end of the HomeBuilder grant in 2021,” added Mr Reardon.
“The market was also cooling as the cost of construction rose, and the change in consumer preferences due to the pandemic desire for space, eroded.
“The adverse impact of the fastest increase in the cash rate in a generation will not be fully observed in building approvals data until later this year and will not hit building activity on the ground until late 2023.
“The significant pipeline of work that Australian builders are still completing, combined with ongoing materials and labour constraints, is creating significant lags between the RBA’s hiking cycle and on-the-ground activity.
“This lag from the first rate rise until it impacts employment is dangerously long in this cycle. The RBA needs to be very cautious in raising rates as the impact of their actions won’t be observed in official data for nearly 18 months, in this cycle.
“The multi-unit sector also contracted further between 2021 and 2022, despite the expected return of overseas migrants, students and tourists, and the ongoing tightness in rental markets.
“There were 73,407 multi-unit approvals in 2022, down by 7.2 per cent from 2021.
“Increasing the number of multi-unit dwellings is critical to addressing the acute rental shortage across the economy.
In seasonally adjusted terms, total building approvals were down in all jurisdictions between 2021 and 2022, with the declines led by Western Australia (-36.3 per cent), and followed by Tasmania (-20.3 per cent), Queensland (-18.1 per cent), New South Wales (-14.5 per cent), South Australia (-13.1 per cent), and Victoria (-12.6 per cent). In original terms, total building approvals fell in the Australian Capital Territory (-4.6 per cent) and rose in the Northern Territory (+5.2 per cent).
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