Downward trend in US approval

The latest building approval figures continue to reflect the effects of the COVID-19 outbreak, but one state appears to have turned the tide of single-family homes in June.

Victoria was the only state to post a gain in the month, with individual housing approvals increasing 0.9% on a seasonally adjusted basis, according to the latest figures from the Australian Bureau of Statistics (ABS).

In contrast, unit approvals declined across the state, albeit slightly to 0.2%. This compares to double-digit declines in New South Wales (14.8%), Western Australia (11.7%), Queensland (10.9%) and Tasmania (10.8% ).

“The impact of COVID-19 was evident on housing approvals in June. Falls have been recorded in all states, and in individual and attached dwellings, ”said Bill Becker, assistant director of construction statistics.

Victoria's gain in housing approval, however, may be short-lived, said Maree Kilroy, economist at BIS Oxford Economics.

"Melbourne's second foreclosure weighs negatively on turnover and will weigh on demand for new housing in Victoria, amplifying geographic gaps in demand for short-term housing," she said .

Overall, the number of dwellings approved in the month fell 4.9%, driven by a 5.7% drop in single-family homes and 5.3% in units.

Kilroy expects the national downward trend in approvals to continue over the coming months, given several factors including a tough job market and low population growth.

Housing Industry Association (HIA) analysis showed that the number of new homes approved during the month reached its lowest level since June 2013 while that of units reached its lowest since 2012.

While the HomeBuilder program has helped sales numbers increase, its impact on building approvals may arise later, said Geordan Murray, senior economist for HIA.

"It is still too early to see an impact on approval data. HIA predicts that building approval data will continue to decline for several months, before HomeBuilder stops the decline," said he declared. "The increase in sales following HomeBuilder's announcement will become evident in approval data later in the year."

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