For the first time since 2018, the number of residential building approvals in Victoria cracked 70,000 during 2021. The bumper year for construction offers hope for the industry heading into the new year after a prolonged period of uncertainty. The figures are also a promising indication that the sector is on track to return to it’s pre pandemic levels.
Master Builders Victoria (MBV) anticipates the opening of international borders will continue to bolster population growth and subsequent approvals into 2022.
“This demonstrates high levels of confidence and demand from the private sector as Victorians began to emerge out of lockdowns and into some form of normality,” MBV CEO, Rebecca Casson said
The figures are According to the Australian Bureau of Statistics (ABS) Building Approvals reported through the year until November 2021. Victoria’s total approval count topped 70,463.
Daniel Rossi, ABS Director of Construction Statistics, said that the private housing sector had been a key benefactor of the Home Builder grant offered during the midst of the pandemic.
"Private sector houses continue to level off, up 1.4 per cent in November, following a 3.5 per cent rise in October,” he said.
“The series has been at historically elevated levels over the past year, largely driven by Government stimulus and record low interest rates.
“While private house approvals are no longer at record highs, the November result remains 25.8 per cent higher than the pre-pandemic level in November 2019, indicating on-going strength in the detached housing market.”
What Does This Mean for The Industry?
Despite the return of confidence to the housing market, the conclusion of the Government’s Home Builder Grant in April last year has led some experts to predict a decline in approvals in the coming year.
“While the wind-back of fiscal support was always expected to lead to a fall in residential building approvals, the decline has been faster in recent months than the market expected,” ANZ economist Adelaide Timbrell told The Urban Developer.
“We know much of the increase in approvals represented a bring-forward of activity, so we expect to see more declines.”
Australia-wide, the country witnessed a record year for home commencements too. Housing Industry Association (HIA) Economist Thomas Devitt said that there were numerous factors influencing the industry heading into coming years – both positive and negative.
“The current boom is expected to continue supporting strong levels of employment into 2023, aided further by record low interest rates and the pandemic pushing households towards lower density living,” he said.
“Strong employment conditions, rising house prices and consumer confidence are also continuing to support housing demand.
“The constraint on home building is not demand but the availability of land, labour and materials. The shortage of labour and materials has led to construction timeframes increasing significantly.
“Under normal circumstances, the surge of HomeBuilder projects would have translated into an increase in completions from the June 2021 quarter. However, completions have been slower to respond. As a result, the volume of approved-but-not-yet-commenced work is at its highest level in over a decade.”