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Housing growth continues and Victoria leads the way

Australia’s housing approvals surged in March, rising 9.2% compared with February, totalling 19,452 separate approvals. While the monthly data was positive, the big stories are that free-standing house approvals are still growing and Victoria’s approvals remain at record levels. Source: IndustryEdge for Timberbiz

For the year-ended March, national approvals totalled 225,393 separate dwellings, just 0.4% lower than for the prior year. Examined in detail, the data shows that over the last year, national approvals of free-standing houses increased 1.7%, semi-detached approvals rose 18.9% and townhouse approvals were up 2.8%.

“Australia has a two-speed housing economy,” Tim Woods at IndustryEdge said. “Single family dwelling approvals are still growing, but flats and apartments are not.”

Multi-residential dwelling approvals all declined over the last year, with one storey flat approvals down 31.0%, two and three storey flat approvals down 6.5% and 4+ storey flats down 6.1%.

Population fundamentals are the long-term driver of housing markets. IndustryEdge says this is why Victoria continues to report record levels of approvals.

“Approvals for Victoria were just over 73,000 separate dwellings for the year-ended March 2018,” Mr Woods said.

“That is another annual record. Maybe more important for those in the forest and wood products industry, approvals of the single-family formats totalled a little over 34,000 dwellings. That is not a record, but it remains high and means there is plenty of work ahead.”

Typically, once approved, new dwellings take approximately 18 months to be built, meaning that the pipeline of housing construction activity remains robust, more than four years after this current housing boom commenced.

“Just last week we heard from the brick-laying sector that they are at least 100 apprentices short in Victoria alone, which gives a clue to demand and how difficult it is proving to get houses built,” Mr Woods said.

“The availability of work is one reason why people move state or region, suggesting growth in Victoria’s population will fuel further housing activity in coming years.”

Monthly housing data will always be patchy, with large apartment developments impacted in particular.

“You can go months without large multi-storey apartment complexes being approved, then have a development of up to 1000 apartments approved in the next month,” Mr Woods said.

IndustryEdge says that large movements in monthly approvals are not evidence of a boom, and do not necessarily mean the cycle has turned or trends have changed.

“Monthly data is interesting, but it is better to examine the annual data to determine what is really going on,” Mr Woods said. “Housing markets are not made or broken on a single month’s data.”

Wood Market Edge is available for subscription, and is also provided on a complimentary basis to subscribers to the monthly wood products trade data series, which includes Woodchip Export, Log Export and Sawnwood Import and Export data.