House building approvals fall in April but strong demand remains

author-avatar By on June 01, 2021
House building approvals fall in April but strong demand remains

The number of dwellings approved fell 8.6% in April, seasonally adjusted, after an 18.9% rise in March.

The figures from the Australian Bureau of Statistics (ABS) were better than expected, with economists forecasting a 10.0% drop. 

The fall in the number of dwellings approved in April was driven by a 28.6% drop in private sector apartments and townhouses. 

Looking to build a home? Below are a handful of low-rate construction loans in the market.

Daniel Rossi, director of construction statistics at the ABS, said despite the drop, the aftermath of HomeBuilder meant there was still serious demand for new builds. 

"While there was a fall in overall approvals, the April result highlights the continued strong demand for detached housing, with private sector house approvals reaching a new record high in April, up 4.6%," Mr Rossi said.

"Since the introduction of HomeBuilder in June 2020, private house approvals have risen 84%, with South Australia hitting a new record high in April, and New South Wales reaching the highest level since December 1988."

HomeBuilder's expiry on April 14 didn't affect the April data from the ABS, as the building approval process typically occurs after the HomeBuilder application submission. 

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Source: ABS

ANZ economists said they expected to see growth continue, with total annual approvals at their second highest level since November 2017. 

"We could see continuing growth in unit approvals as optimism about the labour market flows continues to flow through to investor lending," they said.

"In March, investor lending growth (54.3% y/y) converged with owner occupier lending growth (55.6% y/y) for the first time since the pandemic downturn.

"Very low interest rates (including strong forward guidance on interest rates by the RBA) and continued fiscal support for home buyers announced in the May budget are also supporting demand for housing, which is likely to keep supporting approvals past the effects of Homebuilder."

New South Wales was the strongest performer, where total dwelling approvals rose 12.3%, followed by Western Australia (5.5%), and South Australia (3.4%). 

Victoria recorded a 25.3% fall, with Queensland the next worst performer (-14.3%). 

The value of total building approved decreased 22.6%, in seasonally adjusted terms.

The value of total residential building fell 7.1%, driven by a 7.6% fall in new residential building and a 3.8% fall in residential alterations and additions.

The value of non-residential building fell 43.2%, mainly driven by a decrease in public sector approvals, following a record high reached in March.


Photo by Dakota Roos on Unsplash 

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

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*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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