Homebuilding approvals are heading in the right direction as it hit a 2-year high, opening up the possibility of more residential construction activity in the near future.
According to the Australian Bureau of Statistics, a total of 16,579 approvals were issued in January. This marked a 6.3% month-on-month increase and 21.7% year-on-year increase. This increase was also the highest monthly total since December 2022.
Housing Industry Association economist Maurice Tapang said, “The increase in approvals signals positive momentum heading into the new year. Households gradually return to the market and begin building new homes.”
“New housing approvals had been strengthening on the back of low levels of unemployment, recovering real wages and ongoing strong population growth. This has been happening even before the first interest rate cut was delivered [in February].”
Master Builders Australia chief economist Shane Garrett also welcomed the increase in approvals numbers. However, he but warned that without a further rise, housing supply would continue to fall short of demand.
“Higher-density home building has been at woeful levels for nearly a decade. The insufficient new supply in this part of the market has forced rental prices to skyrocket,” he said.
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