New home building approvals fell 9% across Australia in November last year, as the recent cash rate hikes start to weigh on building approvals.
According to the Australian Bureau of Statistics, the November result was the third consecutive month of declines for total dwelling approvals, having fallen 21.7% since last August.
Daniel Rossi, ABS head of construction statistics, said the result was driven by unit dwellings, which decreased 22.7%, while house approvals fell by 2.5%.
Total dwelling approvals fell 18.4% in New South Wales, 17.5% in Western Australia, 12.7% in Victoria and 5.6% in Queensland.
Meanwhile, total dwelling approvals rose 75.7% in Tasmania and 10% in South Australia.
Housing Industry Association (HIA) Economist Tom Devitt said a fall in building approvals at the end of 2022 was the next step in what had been a very well broadcast downturn in the housing market caused by the increase in the cash rate.
“Within two months of the RBA’s first interest rate hike in May 2022, leading indicators of building activity including new home sales started to decline,” Devitt said.
“Investors, first home buyers and owner-occupiers started retreating from the housing market.
“Today’s data suggests that builders have worked through much of the large pipeline of work that existed in May 2022, when the RBA started increasing the cash rate. This will result in a slowdown in the number of homes under construction in 2023.”
Devitt said the full impact of the 2022 increases in the cash rate would not be observed until the second half of 2023.
“The depth of this downturn will be determined by the RBA’s cash rate decisions,” Devitt said.
“The RBA has already undertaken the steepest hiking cycle in a generation and it needs to hold fire on further hikes to give their actions to date time to play out.
“As more housing market indicators reflect the impact of cash rate increases to date, the RBA will be under increasing pressure to reverse course in the second half of this year.”