The monthly building approvals data from the Australian Bureau of Statistics have again underlined its unreliability and lack of consistency with the 18.5% jump in December more than reversing the 8.8% drop in November.
The figures are not that too outlandish – it’s the make-up of the rise that’s the problem, with the ABS reporting a 56.6% surge in approvals of units, apartments and townhouses, predominantly in NSW and Victoria in December.
That smacks of local governments in both states – the two largest for home building and construction – clearing out approvals before they went on their Christmas-New year break and holidays. There was a large 27.5% rise in December, 2021 which at least could be partly explained by the impact of the Covid lockdowns and social distancing restrictions and remote working.
“The increase in the total number of dwellings approved in December was led by a sharp rise in approvals for private sector dwellings excluding houses (+56.6%). The result was driven by a number of large apartment developments approved in New South Wales and Victoria,” Mr Rossi said.
Across Australia, total dwelling approvals rose in New South Wales (+48.4%), Victoria (+20.7%), Queensland (+8.3%), and Western Australia (+6.4%), while Tasmania saw an almost impossible fall of 49.7%! and South Australia saw a drop of nearly 25%.
“Approvals for private sector houses continued to track downwards, falling by 2.3%.”
Approvals for private sector houses were mixed, with increases in Western Australia (+8.2%), Victoria (+0.3%) and Queensland (+0.2%), while South Australia (-7.4%) and New South Wales (-4.2%) fell.
The value of total building approvals rose 3.0% in December, following a 0.6% fall in November. The value of total residential building approvals rose 6.6%, comprised of a 7.2% increase in new residential building and a 2.7% increase in alterations and additions.
The value of non-residential building approved fell 1.7%, following a 2.2% rise in November.
Total approvals were down just 3.8% over 2022, private houses approvals fell 11.8% while non-private dwelling approvals were up 2.9%, thanks to the surge in December.
These statistics are of low-level importance for the Reserve Bank because of their volatility. The re-introduced trend series (which tries to smooth out wild swings) showed a fall of 6.6% in total dwelling approvals over 2022, with private houses down 0.1% and non-private dwelling approvals down 1.1%.
The housing finance data to be issued later today (Friday) is of more importance because that tells the RBA (along with data from APRA) and its own housing credit figures) just what the banks are doing, who is borrowing and lending and how much and the types of loans.
For example, a housing loan refinancing boom emerged from mid 2022 onwards as the RBA lifted rates to control inflation. December’s data today will confirm the refinancing continued. The refinancing boom is coming at the expense of approvals for new houses. That’s the bad news from both sets of data.
