Date: 2021-06-02 06:05:23
Housing approvals hit a record high at the end of 2020 as home builders rushed to take full advantage of historic low interest rates and the federal government’s $25,000 grant for home builders before it reduced in the new year.
There were 13,638 houses approved across the country in December, up 16 per cent compared to the month before and more than 50 per cent up on December 2019, Australian Bureau of Statistics data released on Wednesday shows. There were 5625 apartments approved, up 2 per cent month-on-month but down 19 per cent over the year.
The federal government introduced a $25,000 HomeBuilder grant in June to help offset the coronavirus pandemic-induced downturn and initially provided a three month period to start construction. This has since been extended to six months to achieve the full grant. Those who sign building contracts between January and March will get a lower $15,000 grant.
Applications for the HomeBuilder grant by December 31 for new properties nationally reached about 60,000, including more than 8700 in NSW and 17,300 in Victoria.
National house approvals have now hit a new high after six consecutive monthly increases, with every state seeing a surge in December. Tasmania was up 67 per cent over the month, with Queensland approvals rising 24 per cent, South Australia 17 per cent, Victoria 9 per cent, Western Australia 8 per cent and NSW 2 per cent.
ABS director of construction statistics Daniel Rossi said the figures for house approvals were new records for Victoria, South Australia and Western Australia. NSW is at its highest house approval rate since March 2000, while Queensland is at its highest since 1994.
“Federal and state housing stimulus measures, along with record low interest rates have contributed to strong demand for detached dwellings,” Mr Rossi said.
Commonwealth Bank associate economist Nicolas Guesnon said in a research note the low borrowing costs after the Reserve Bank of Australia cut interest rates to the record low 0.1 per cent in November “enabled households to finance renovations and new builds relatively cheaply”.
Approvals for alterations and additions increased about 8 per cent over December, lifting 37 per cent over the year. The HomeBuilder grant is available to those undertaking “substantial renovations” worth more than $150,000, though many renovations don’t require formal approvals. The value of residential alterations and additions hit a record high of $942 million over the month.
Mr Guesnon said non-residential approvals, such as office, retail, health, industrial and office buildings all trended lower over the year. “The outlook for the non-residential sector faces headwinds from the drop in net overseas migration and international tourists as well as the major shift towards working from home,” he said.
Housing Industry Association economist Angela Lillicrap said it was an “exceptional result” during a pandemic and had likely not yet reached its peak as building approvals tend to lag behind data like home sales and housing finance. “This volume of work will ensure ongoing employment growth in the sector through 2021,” Ms Lillicrap said.