Up-tick in Queensland building approvals, while Victoria surges

Building_approvals_Nov14

There was a welcome 5.6% increase in building approvals in November last year according to ABS data released yesterday (see chart above), largely due to approvals of new apartments and townhouses. Of course, the volatility of approvals from month-to-month means that this gain could be wiped out in the December data, and also approvals still remain below pre-financial crisis highs.

Finally, yesterday’s data confirm there is something pretty extraordinary going on in Victoria, which Queensland policy advisers should investigate. In part, the surge in Victorian building approvals at the end of 2014 may be due to the introduction of changes to residential zones in Victoria, which were designed to give greater protection to heritage and character housing. It’s possible there was a surge in development applications earlier in the year, before the reforms were introduced, and these applications have just been approved. So we’ll have to wait and see if there’s a correction in Victoria in coming months. In any case, Victoria deserves close attention from Queensland policy advisers because, as I’ve noted before, one of the reasons interstate migration and population growth have fallen in Queensland is because we are no longer attracting people (in net terms) from Victoria. Victoria has obviously done something right to improve the livability of the State and the economic opportunities available.

See my previous post:

Victoria beating Qld in budget management and other policy areas

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2 Responses to Up-tick in Queensland building approvals, while Victoria surges

  1. Jim says:

    Gene

    Good post. We mustn’t forget that new housing is a derived demand. There has to be population growth to create demand for new housing stock. Queensland’s population growth rate has slowed as the economy has slowed, so building activity has slowed. No surprises there.

    What does surprise me is the fact that so many people in the building industry are whinging about building activity levels and margins. If you don’t have the unreasonable expectation that building approvals will return to pre-GFC levels, then the building approvals data for Queensland is pretty encouraging. It is probably time the building sector re-callibrated their expectation of normal levels of activity and margins.

    The last thing needed in the current election campaign would be some form of stimulus package for the construction sector. There is no evidence of market failure.

    • Gene Tunny says:

      Thanks Jim, I totally agree there is no evidence of market failure. I am concerned, however, about the drop in Qld’s population growth. it suggests to me that Qld’s attractiveness as a place to live has dropped significantly, and that might be because we haven’t properly catered for previous population growth.

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