The Housing Industry Association was quick to proclaim Detached Building Approvals Reach Record High after the ABS published the December building approvals data today. “Detached building approvals” are approvals for houses, as opposed to approvals for apartments or townhouses. Obviously, the record high is related to ultra-loose monetary policy from the RBA, less rigorous lending policies from banks, and the federal government’s HomeBuilder grant. In Queensland, it wasn’t a record high for housing approvals, but rather the highest level since the peak period of interstate migration to Queensland in the early to mid-nineties (see chart below), when Queensland was gaining up to 1,000 people per week from interstate migration, in net terms (i.e. arrivals less departures). Note that total approvals aren’t yet near the peaks of five years ago, when there was an apartment building boom in Brisbane.
The surge in approvals is good news for the building industry, its supply chain, and the economy more broadly. We’ll need dwelling investment to add substantially to Gross State Product (and GDP nationally) to offset the contractionary impact coming from the winding down of JobSeeker and JobKeeper. We also need to see additional supply to moderate the growth in property prices. According to CoreLogic, Brisbane property prices rose 0.9% in January and 2.5% in the three months to 31 January (see Australian housing values reach a new record high as values continue to rise across every broad region of the country).
Finally, also check out the Queensland Treasury building approvals briefing which nicely illustrates just how big the surge in approvals in December was.
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