Dwelling Approvals


Monthly Statistical Bulletin Feature Articles

The number of dwelling units approved in a month is a useful indicator of the strength of consumer and investor confidence and a leading indicator of economic activity within the building sector and the wider economy.

Dwelling units

The Australian Bureau of Statistics (ABS) defines dwelling units as self-contained suites of rooms including cooking and bathing facilities and intended for long-term residential use. Such dwelling units include houses-detached buildings used for long-term residential purposes-and other dwellings including flats. Although organisations offering institutional care or temporary accommodation build self-contained dwelling units these are not defined as dwelling units by the ABS and are included as non-residential buildings.

Approvals

ABS publishes approval figures separately for houses and other dwellings.

Figure 1 shows approvals by month on a seasonally adjusted basis in the period from July 1983.

Figure 1 Dwelling Approval: Seasonally adjusted

Annual total approvals for the period from 1956-57 are showed at Figure 2. Note that there is a break in the continuity of these annual data between 1982-83 and 1983-84.

Figure 2: Annual dwelling approvals 1956-57 to 1996-97

Figures 1 and 2 show a strong cyclical pattern in dwelling approvals with peaks about four years apart. This reflects the boom-bust nature of the residential construction industry whereby an oversupply of property at the end of a boom is followed by a downturn in activity. When excess supply is absorbed, approvals and construction begin to rise again.

The demand for new dwellings is a function of many factors. One obvious factor is an increasing population. Another is the changing structure of family and household units. Such factors combine with economic conditions and housing affordability to produce the visible demand for new dwellings.

Demand for new dwellings comes mostly from owner occupiers. However investors and developers are also significant market players: their decisions to construct new dwelling units are based on their perceptions of future demand for housing.

Annual changes

Annual percentage changes are shown at Figure 3. They are useful to indicate whether building approvals are trending upwards-positive values-or downwards-negative values-and can point to a strengthening or weakening building sector.

Figure 3: Dwelling approvals: annaul percentage change, July 1984 to April 1998

Other statistics

The ABS also publishes a range of other indicators of building activity. These include statistics on investment in rental dwellings and numbers and value of dwelling unit commencements and completions.

MESI Table 4.3

Monthly Economic and Social Indicators Table 4.3 shows:

  •  monthly data on the number of dwelling approvals;
  •  annual totals of dwelling approvals; and
  •  annual percentage changes of dwelling approvals.

Monthly dwelling approvals are graphed to show the movement in the series over the past few years.

Further information can be obtained by contacting a member of the Statistics Group, Information and Research Services, Department of the Parliamentary Library.

This feature was prepared by Greg Baker.

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