Despite the signs the housing cycle was easing, August saw Australia’s total dwelling approvals lift 6.8% compared with the prior month, rising to 227,952 separate approvals. Free-standing house approvals lifted 3.8% to record an annual total of 153,929 separate approvals, up a massive 45.2% on the prior year.
In total, national approvals were up 31.0% on the prior year and headed towards their highest ever level.
It is little wonder, aside from any other consideration, that every aspect of the housing supply chain has found itself stretched beyond its limits over the last year. Coming out of a slowdown, stripping operating inventories to nothing, ramping production and deploying every resource available to them has still left a supply chain with many challenges and a massive pipeline of work waiting to be built.
The chart here shows dwelling approvals on an annual basis, and for houses, on a monthly basis. It is clear total approvals (green line) have been higher, but not by much. However, for houses, the evidence is even more clear. Approvals of houses simply boomed month-by-month over the last year, pushing to the all-time annual high (red line) of 153,929 houses.
It is critical to put house approvals into a wood products industry context. The chart below, from IndustryEdge, shows annual approvals of houses and townhouses (the major wood users of the dwelling formats) lifted to a little more than 186,000 approvals year-ended August.
That was around 33,000 approvals higher than ever before, with house approvals alone more than 48,000 approvals higher than for the prior year. Little wonder the entire supply chain has been stretched within an approval of its life!
Annualised Dwelling Approvals: Houses v Total: Jul ’92 – Aug ‘21
Source: ABS, derived and IndustryEdge
For all that the approvals data is (distressingly at some points) remarkable, it is also not likely to last. Even after the off-note lift in approvals in August, as Michael Bleiby wrote in the Australian Financial Review:
“…even though the new housing pipeline appears to be strengthening – despite the volatility of monthly figure – the big risk for the industry is that it runs out of steam without a resumption of inbound migration.”
Surf the pipeline while you can: the trough behind the wave is likely to be really deep – lets hope it is not another record.
