Home building has begun 2024 weakly. According to January approvals figures from the ABS released on Monday, they dropped to their lowest monthly level in 11 years.
The total number of dwellings approved fell by 1.0% in January (seasonally adjusted) to 12,850 after a 10.1% drop in December.
January’s total was the lowest since January 2013 when there were 12,746 approvals granted.
January’s total was also almost half of the all-time high of 23,158 approvals granted in March 2021 when the HomeBuilder subsidy was expiring.
The latest figures suggest there will not be a big backlog of home building this calendar year, which should help ease price pressures for new home building projects as well as renovations (which were down 3.1% in January).
This also suggests there will be pressure on the likes of Bunnings (Wesfarmers) and Mitre 10 (Metcash) as well as on Boral and CSR from the weak outlook for home building in 2024.
January 2024 approvals for private sector houses fell in all states: Victoria saw a fall of 16.7%, New South Wales was down 13.1%, WA, 7.3%, Queensland was off 1.7%, and South Australia saw a 0.4% fall.
Daniel Rossi, the ABS head of construction statistics, said approvals for private houses fell 9.9% in January after a 19.5% jump in approvals for private dwellings excluding houses.
He said that was due to a big rise in apartment approvals in Queensland.
Total dwelling approvals fell in New South Wales (-14.9%), Victoria (-9.8%), and South Australia (-7.2%). Meanwhile, there was a massive 31.8% jump in approvals in Queensland because of the green light being given to a lot more apartment projects.
Western Australia saw an 11.4% rise, and there was a 5.1% rise in the small Tasmanian market.
Analysts say that a rate cut from the Reserve Bank could alter the weak outlook very quickly.
