Australia’s home building approvals jumped by almost 20 per cent in February, the largest month-on-month gain since 2013, but the extreme economic fallout as a result of the coronavirus pandemic is yet to be seen across the sector.
Total building approvals increased 19.9 per cent in February, largely driven by a 61.7 per cent increase in private dwellings excluding houses, seasonally adjusted.
The monthly Australian Bureau of Statistics figures show the surge was due to strength in approvals for apartments in Victoria, with high-density approvals surpassing expectation.
A total of 15,698 dwellings were approved, consisting of 8,577 houses and 6948 non attached dwellings.
HIA economist Angela Lillicrap said Victoria led the states with its 22.6 per cent improvement in the three months to February, compared to the previous three months, and was up by 18.7 per cent for the same period last year.
“These results, along with other leading indicators such as new home sales and housing finance data, continue to confirm that the housing market reached a turning point mid-way through 2019,” Lillicrap said.
But the Covid-19 pandemic is largely forecast to impact the sector in the coming months.
BIS Oxford Economics economist Maree Kilroy says the latest data lead will have little impact on activity over 2020, with the momentum that was building in the residential property market, now lost.
“The Covid-19 pandemic is expected to cause a second leg down in the residential construction downturn,” Kilroy said.
“Extreme economic anxiety and the banning of public auctions and open house inspections will see the demand for new dwellings take a big hit over the remainder of 2020.”
ABS director of construction statistics Daniel Rossi said the recent bushfire events and Covid-19 did not result in significant impacts to the ABS building approval February figures.
“Whilst it is expected that bushfire rebuilding and recovery activity will have some impact on future building approvals estimates, this activity is not yet present in the February estimates.
Building approvals for the three months to February 2020 quarter increased in Victoria (+22.6 per cent), and Western Australia (+1.1 per cent), in seasonally adjusted terms.
While building approvals declined in Tasmania (-7.3 per cent), New South Wales, (-5.2 per cent), Queensland (-4.9 per cent) and South Australia (-17.4 per cent).
In trend terms, the Australian Capital Territory increased by 1 per cent while the Northern Territory declined by 6.7 per cent.
The ABS said it is still monitoring for impacts from Covid-19 on building approvals statistics.