“Building approvals in the first month of the new year fell to their lowest level in over a decade, as 2022’s interest rate increases continue to weigh on the housing market,” stated HIA Senior Economist Tom Devitt.

The Australian Bureau of Statistics today released its monthly building approvals data for January for detached houses and multi-units covering all states and territories.

“Both detached house and multi-unit approvals in January declined by 13.5 per cent and 43.7 per cent respectively. While multi-unit approvals can be volatile from month-to-month, the continuing declines in the detached sector are reflective of the RBA’s rate increases from last year,” added Mr Devitt.

“The last time detached house approvals were at these low levels was also the last time the RBA overshot with increases in the cash rate, which was in June 2012.

“This will not be the end of the decline in approvals. The adverse impact of last year’s cash rate increases is still to fully flow through to the official data.

“The higher cash rate is compounding the adverse impact of the rising cost of materials, labour and land as well as the increased costs of compliance with the building code.

“There remains a large volume of work underway on the ground that will be completed in 2023 and this will keep unemployment in the national economy exceptionally low until early 2024.

“If the RBA continues to raise rates, they do risk a longer and deeper slowdown in economic growth than is necessary in this cycle,” concluded Mr Devitt.

In seasonally adjusted terms, total building approvals were down in almost all jurisdictions in the first month of 2023, with the declines led by New South Wales (-49.0 per cent), Victoria (-38.6 per cent), Tasmania (-31.7 per cent), Western Australia (-7.9 per cent) and South Australia (-6.5 per cent). Queensland saw the only increase for the month in seasonally adjusted terms, up by 25.6 per cent. In original terms, total building approvals fell in the Australian Capital Territory (-57.5 per cent) and the Northern Territory (-51.1 per cent).