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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