Building approvals continue to plummet

The Australian 12:00am March 14, 2019

Michael Owen

Construction trends across the country appear bleak as the number of building approvals continue to steadily fall, driven in part by ­reluctant bank lending.

An analysis of the amount of approvals for new buildings in 2019 compared to the same period last year shows values across the country are plummeting in all states and territories except ­Tasmania and the ACT.

The significant falls in NSW are creating growing concern about a big slowdown in the ­supply of new homes in the state.

In South Australia, the construction industry warned it was heading for a crisis with a 33 per cent fall in building approvals ­during the past 12 months from $546 million in January last year to $362m in January of this year.

South Australian opposition leader Peter Malinauskas said yesterday two more building companies — Cubic Homes and JML Home Constructions — were facing collapse amid ongoing pressure from the national housing downturn. This follows the recent collapse of other South Australian companies including ODM Group, OAS Group and Platinum Fine Homes.

The trend estimate for total building approvals throughout Australia fell by 3.2 per cent in January, according to latest available data from the Australian Bureau of Statistics, while the value of total building approved fell 1.5 per cent, and has fallen for 14 months.

ABS’s director of construction statistics, Justin Lokhorst, said the trend for total building approvals had steadily declined over the past year. “The series is now at its ­lowest level since May 2013,” Mr Lokhorst said.

The figures are used to gauge the level of future construction ­activity in Australia, as obtaining government approval is one of the earliest steps required before building activity can start.

Construction is the economy’s largest provider of full-time jobs in Australia. Building approval values over the past year were down in NSW ($3.47 billion to $2.96bn); Victoria ($3.62bn to $2.9bn); Queensland ($1.85bn to $1.52bn); Western Australia ($763m to $855m); South Australia ($546m to $362m); and the Northern Territory ($28.7m to $69.5m).

Building approval values in the ACT rose from $101m in January last year to $202m this year and in Tasmania from $141m to $196m.

The Master Builders Association blamed the sharp downturn in South Australia on low population growth, reluctant bank lending and inadequate planning laws. Master Builders SA chief executive Ian Markos said this year’s state budget needed to ­include a stamp duty exemption for first homebuyers.

“South Australia continues to have the lowest percentage of first-home buyers out of any state. Abolishing stamp duty for first-home buyers has been tremendously successful in NSW and Victoria and it’s time we followed suit,” Mr Markos said.

Urban Taskforce chief executive Chris Johnson said the value of lending by dwelling investors in NSW dropped by 30 per cent between January 2018 and January 2019.