Approvals for residential construction continued to hold during the March quarter, proving that the housing market experienced momentum when it entered in 2020, according to the latest figures from the Australian Bureau of Statistics (ABS).
Building approvals recorded quarterly growth of 1.8% in March, with homes and units recording gains of 1.9% and 1.5%, respectively.
"At least until the end of March, we envision solid house building activity in most areas for 2020," said Tim Reardon, chief economist at the Housing Industry Association.
New South Wales helped boost overall quarterly growth after posting a seasonally adjusted 16.5% increase in construction approvals. Tasmania also posted a solid 6.1% gain.
"New South Wales had the strongest month for multi-unit approvals since February 2019, making the March quarter 28.6% higher than December 2019. This suggests that there was another, albeit smaller, building cycle on the way, "said Reardon.
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Tasmania also posted robust growth at 6.1% while approvals in Western Australia, Victoria and Queensland remained stable. In contrast, approvals in South Australia decreased by 19.1%.
In terms of housing type, approvals for individual housing and for housing increased during the quarter, up 1.9% and 1.5%, respectively.
While Approval Gains Indicate Strong Housing Market Fundamentals, Reardon said recent data had not yet reflected the impact of restrictions imposed due to COVID-19 .
"Due to the time lag between purchasing housing and obtaining building approval, these results come from sales prior to trade and travel restrictions" , he said.
Reardon said approval figures and data on new home sales, house prices and housing finance showed that the market was entering the new decade strongly.
Maree Kilroy, economist at BIS Oxford Economics, said that the COVID-19 shock had not yet appeared in the approval data.
"Housing approvals are expected to weaken during the remainder of 2020 in response to significantly lower demand for new housing," she said.
Denita Wawn, CEO of Master Builders Australia, said that the COVID-19 epidemic could potentially stop the construction of 43,000 homes in the next 12 months. Project managers previously predicted that there would be around 159,000 new homes in 2020/21.
"We now expect that there will be only 116,000, a decrease of 27%. There is already a current deficit in achieving the target of 200,000 homes per year, which means that the impact on the housing needs of our community will be severe, "she said. .
Wawn said that federal and state government policies and stimulus will be essential to ensure that the effects of the epidemic are not severe.
"We want the building and construction industry to be in shape to rebuild Australia. We want to protect the viability of hundreds of thousands of small businesses and the jobs of a million Australians. To do this, we need governments to act now, ”she said.
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