Dwelling Approvals
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.
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.
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.
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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