Dwelling approvals have fallen from their highs of recent years and been fairly steady over recent months however, in September 2017 the number of dwellings approved for construction increased on the back of a jump in unit approvals.  Data released earlier by the Australian Bureau of Statistics (ABS) highlighted the lift in dwelling approvals, which were recorded at 18,849 in September 2017, was 1.5% higher over the month and 0.2% higher than in September 2016.


According to the data, the 18,849 dwelling approvals were split between 9,989 houses and 8,860 units.  House approvals increased by 0.8% over the month and were 2.2% higher than a year ago.  The 9,989 approvals was the second highest monthly number of house approvals over the past 16 months.  The 8,860 unit approvals was 2.3% higher over the month but -2.0% lower than 12 months ago.  Unit approvals were the highest they’ve been since February 2017.  


Taking a look at the composition of unit approvals, the bounce over the month was driven by high-rise (four storeys or greater) approvals which increased by 36.0%, while townhouse approvals fell -4.0% and low-rise approvals were 8.3% higher.  High-rise approvals were at their highest level in 12 months in , and they accounted for 56.1% of all unit approvals over the month.  The trend of late has been toward fewer high-rise approvals and an increasing number of townhouse approvals so it will be interesting to see over the coming months whether the strength in high-rise approvals continues or it fades and the popularity of medium to low density approvals continues to increase.


Focussing specifically on the capital cities, there were 15,295 dwelling approvals in September 2017 which was the highest number of approvals in 12 months.  This figure was comprised of 7,015 house approvals and 8,280 unit approvals.  House approvals actually fell by -6.5% over the month while unit approvals increased by 14.3% to be at their highest level since December 2016.


Throughout the individual capital cities, house approvals increased over the month in Sydney (+3.5%) and Canberra (+10.5%) however, they fell in Melbourne (-10.5%), Brisbane (-5.7%), Adelaide (-6.8%), Perth (-8.7%), Hobart (-42.3%) and Darwin (-20.8%).  


Looking at the unit market, approvals were lower over the month in Melbourne (-4.3%), Brisbane (-53.1%), Darwin (-94.4%) and Canberra (-24.2%) while they increased in Sydney (+44.6%), Adelaide (+44.7%), Perth (+252.5%) and Hobart (+61.8%).  Sydney had its greatest number of monthly unit approvals since August 2016 while approvals were the lowest since February 2017 in Brisbane.  Unit approvals also surged in Adelaide, Perth and Hobart to their highest levels since May 2017, August 2015 and March 2015 respectively. 
The national population continues to increase at a rapid pace so it is encouraging to see a heightened level of new construction continue.  It’s pretty clear that units, high-rise units particularly, are driving the resurgence and Sydney has seen a large rise in unit approvals.  This will be an important trend to watch, especially considering that dwelling values are now falling in Sydney, investors are facing tighter credit conditions and the volume of stock for sale is at its highest level since 2012.  These conditions would suggest that developers may be a little more cautious bringing new housing stock to the market.  Of course, just because something is approved for construction does not necessarily mean that it will commence straight away.  While approvals may be rebounding the real test will be to see whether quarterly data on commencements also shows a rebound or if the data highlights an increasing number of approved dwellings aren’t commencing.