Building approvals slide further in November as housing values plummet

The Australian Bureau of Statistics on Monday (9 January) released the November figures that showed dwelling approvals have fallen sharply (9 per cent) following a 5.6 per cent drop in October.

Daniel Rossi, ABS head of construction statistics, said the result was driven by private sector dwellings excluding houses, which decreased 22.7 per cent. Approvals for private sector houses fell by 2.5 per cent.

“The November result is the third consecutive month of declines for total dwelling approvals, having fallen 21.7 per cent since August,” Mr Rossi said.

Across Australia, total dwelling approvals fell in NSW (-18.4 per cent), Western Australia (-17.5 per cent), Victoria (-12.7 per cent), and Queensland (-5.6 per cent) while Tasmania (75.7 per cent) and South Australia (10.0 per cent) recorded increases.

Approvals for private sector houses fell across most states, with Victoria (-8.0 per cent), Western Australia (-6.1 per cent), South Australia (-2.6 per cent), and Queensland (-1.2 per cent) decreasing while NSW rose 1.2 per cent in November.

The value of total building approvals fell 1.5 per cent in November, following a 0.4 per cent decrease in October. The value of total residential building approvals fell 4.0 per cent, comprising a 3.1 per cent decrease in new residential building and a 9.2 per cent decrease in alterations and additions.

The value of non-residential building approved remained strong, increasing 2.0 per cent, following a 2.3 per cent rise in October.

Meanwhile, the RBA’s rate-hiking cycle also triggered the housing market’s biggest decline in more than four decades according to the latest data from CoreLogic.

The 8.4 per cent drop between May 2022 and January 2023 is the sharpest fall since CoreLogic began keeping records in 1980.

It surpasses the previous record-breaking slide between 2017 and 2019 as well as the downturn prompted by the 2007–08 global financial crisis.

Sydney home values led the fall, down 13 per cent from their highest point.

CoreLogic head of research, Eliza Owen, said high household indebtedness may have increased the housing market’s sensitivity to interest rates.

“Higher inflationary pressures, combined with a post-lockdown increase in spending, has also eroded household savings, which could be utilised for a home loan deposit,” she said.