Latest lending figures paint grim picture for construction

Both detached house and multi-unit approvals declined in January by 13.5 per cent and 43.7 per cent, respectively, with Mr Devitt explaining that “the continuing declines in the detached sector are reflective of the RBA’s rate increases from last year.” 

Almost all Australian jurisdictions reported seasonally adjusted total building approval declines in the first month of the year, led by NSW, where they fell 49 per cent, followed by Victoria (38.6 per cent), Tasmania (31.7 per cent), Western Australia (7.9 per cent), and South Australia (6.5 per cent).

In original terms, total building approvals fell in the ACT (57.5 per cent) and the Northern Territory (51.1 per cent). 

Queensland was the only state where approvals increased in seasonally adjusted terms in January after they climbed 25.6 per cent.

Mr Devitt warned, “This will not be the end of the decline in approvals. The adverse impact of last year’s cash rate increases is still to fully flow through to the official data.” 

He believes the current pipeline of work underway is large enough to “keep unemployment in the national economy exceptionally low until early 2024.” 

However, once next year rolls around, as HIA reported last month, it is set to be the worst year for home building in a decade as the impacts of the RBA’s inflation-fighting cash rate cycle take effect in Australian households.

The ABS’ data also found the value of total buildings fell 18.6 per cent during the first month of the year, while the total value of non-residential buildings fell 25.6 per cent throughout January.

Mr Devitt believes a continuation of the cash rate rising cycle means the RBA runs the risk of “a longer and deeper slowdown in economic growth than is necessary in this cycle.”

ABS January data also indicated the value of new lending approvals for total housing fell 5.3 per cent to $22.1 billion, with current levels 35 per cent lower than 12 months ago, while the number of first home buyer loan commitments reported an 8.1 per cent fall to 6,956, which is 57.5 per cent lower than they were in January 2021.