QLD Building Approvals Decline

Richard Katter
Economics, Strategy and Research

Building approval data released today was met with the SMH headline “Building approvals rocket most in eight years” with a 15% monthly change for Australia.

The news for Queensland, however, is not nearly as bright.  THG Economics, Strategy and Research has analysed this data a little more deeply.

When analysed on a state by state basis we can see that Queensland actually recorded a decrease in building approvals for the month. On an annual basis we all do pretty well but it is important to note that Queensland still underperforms compared to other states.  Twelve months ago, we were all in the grips of the GFC, thus the 12 month figure comes off a pretty low base. I think that monthly figures are limited in their ability to provide a true representation of where we are at, so I analysed the figures further to arrive at a monthly average growth rate for the last six months. Again Queensland underperforms when compared with the other two east coast states and Australia on a whole. I think these figures are in line with what the market is actually experiencing. What concerns me though is that the RBA will look at 52% and 15% and may act accordingly.

Given the rate rises we have experienced in recent months, we would expect the rate of growth in building approvals to cool but remain positive. The primary underlying element within the housing market is the existence of an undersupply of dwellings and at the end of the day people need a roof over their heads; so as the economy grows so too should building approvals (a primary indicator of economic growth). The fact that Queensland is under-performing at a time when the mineral sector is leading the country’s growth indicates the fundamental issues facing our state, preventing us from capitalising on the growth, building new houses and remediating our supply and affordability issues.