Units, apartments drive overall jump in approvals

Australia’s dwelling approvals rose significantly in February, driven by the unit and apartment segments.

According to Australian Bureau of Statistics (ABS) latest data set, overall approvals rose by 43.5% over the month, with both houses and units reporting gains of 16.5% and 78.3%, respectively.

On a yearly basis, overall dwelling approvals was down by 7.8%, as housing approvals hit a 27.4% decline. On the other hand, unit approvals still posted a gain on a yearly basis at 25.5%.

Victoria reported the biggest gain in dwelling approvals at 91%, followed by New South Wales at 48.8%.

Queensland was the only state to record a drop in dwelling approvals at 14.6%.

Meanwhile, the value of new residential buildings approved went up by 47.7% to $7.26bn.

CreditorWatch chief economist Anneke Thompson said despite the cost pressures in the construction sector and numerous high-profile insolvency cases among contractors, dwelling approvals remain at historically elevated levels.

“While today’s figures are below the incredible highs experienced mid-pandemic, there were still over 10,000 approvals for private sector houses in February 2022,” she said.

“Prior to COVID-19, any month where approvals were higher than 10,000 was considered a very strong month, and today’s data should be seen in this context.”

Ms Thompson said it is worth noting that the strong showing in approvals for apartments seem to reflect the confidence of developers despite the increasing construction pricing.

“With continued strong activity in the sector, and prices of materials, labour, transport, and storage all rising fast, we expect the sector to come under increasing cash flow pressure,” she said.

“This is exacerbated as many of these payments need to ‘trickle down’ to numerous smaller sub-contractors.”

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