Approvals boost welcome, but one months figures shouldnt delay reform

4 October 2011

August saw an 11.4 per cent surge in the rate of new home approvals across Australia, according to new figures released by the Australian Bureau of Statistics today.

In seasonally adjusted terms, there were increases in NSW (45.2 per cent), Queensland (19.7 per cent), Victoria (7.3 per cent) and Western Australia (5.5 per cent) but a fall in South Australia (4.1 per cent).

The Urban Taskforces chief executive, Aaron Gadiel, said these numbers were a helpful boost, but caution should be exercised when interpreting them.

 

These monthly figures are highly volatile and can be disproportionately influenced by small spikes in the number of multi-dwelling approvals issued in a single month.

 

The largest single source of the seasonally adjusted dwelling increase was NSW, where the jump in dwelling approvals accounted for 83 per cent of the national increase.

 

Mr Gadiel said that NSWs seasonally adjusted private sector house approvals actually fell by 4.3 per cent, but this was offset by a 105.6 per cent surge in approvals for private sector apartments and townhouses.

 

Leaps this big in NSWs monthly private sector high density approval data are not unknown – the same thing happened in April 2009 (a 119.8 per cent jump) and March 2010 (a 119.6 per cent jump).

 

On both these prior occasions subsequent approval rates either stabilised or declined.

 

Mr Gadiel said the strong figures for August had now pushed the national trend for new private sector approvals back into positive territory – a 0.5 per cent increase.

 

Although this is entirely on the back of the, potentially one-off, surge in NSW, he said.

 

Victoria, Queensland and Western Australia are all trending negatively (1.5 per cent, 0.6 per cent, 0.5 per cent respectively), while NSW now shows a positive trend of 5.4 per cent.

 

Mr Gadiel said there was no room for complacency about the situation in NSW.

 

Policy-makers shouldnt let the potentially one-off surge in higher density approvals in NSW blind them to the systemic housing supply problems in the state, he said.

 

Only two weeks ago, the Australian Bureau of Statistics reported that NSWs actual new home construction starts fell by a seasonally adjusted 20.1 per cent in the June quarter.

 

That was NSWs biggest single quarterly fall in five years.

 

Mr Gadiel said that the big NSW decline contrasted with Victoria and South Australia which saw 6.8 per cent and 4.5 per cent increases respectively. Western Australia fell by 1.3 per cent.

 

In the June quarter work started on 6,700 homes in NSW, compared with 14,700 in Victoria and 6,000 in Queensland.

 

The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.

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