Builders in 'hopeful' response to December building approvals

BUILDERS are hoping for a sustained increase in high density dwelling construction of the type that is driving early signs of a rebound in building approvals. That is Master Builders Australia deputy CEO Shaun Schmitke's assessment of the December Australian Bureau of Statitistics (ABS) building approvals report.

“According to the ABS, new home building approvals bounced back sharply during December 2022," Mr Schmitke said. "Compared with November, 18.5 percent more new homes were approved.

“However, the flow of approvals is still a little weaker than 12 months earlier," he warned. “December’s performance was driven by higher density homes, which jumped by some 58.8 percent during the month. Approvals for new detached houses dipped by 2.4 percent during December. 

“Higher density home building approvals are particularly sensitive to interest rate movements and have been on the way down over most of 2022 until a sharp jump in December.

“The stronger performance of medium/high-density home is welcome, and we hope this will be sustained as renters are crying out for more new apartments and units," Mr Schmitke said.

“Latest inflation data shows that rental costs are increasing at their fastest rate in a decade.

“Further increasing the supply of new apartments and units will be crucial to addressing housing affordability challenges in the rental market.

“Australia’s capacity to absorb the inward migration in the volume we need will depend on having an abundant supply of rental accommodation,” Mr Schmitke said.

For detached houses, the continued reduction in activity followed the achievement of record output during the pandemic, Mr Schmitke said.

“Detached house building is being held back by insufficient supplies of titled residential land," he said.

“We continue to work closely with governments in order to address some of these obstacles and achieve a sustained pipeline of projects, that are delivered on time and to the standards communities expect.

“Since the pandemic, demand for housing in regional markets has increased significantly. There are particular concerns that land supply bottlenecks are an obstacle when it comes to new home building which is impeding their wider development,” Mr Schmitke said.

www.masterbuilders.com.au

 

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