Building approvals remain near all-time lows

Building approvals recorded a significant jump in May, but remain near record-lows, reinforcing Western Australian building industry concerns over blockages in the approvals system that are threatening to shackle a return to growth.

New data from the Australian Bureau of Statistics, released today, showed a 24.8 per cent rebound in building approvals in May for WA, after a 47.2 per cent fall in April immediately after the introduction of the state’s new Building Act.

The 1,178 dwellings approved for construction in May was well down from the 1,466 new homes ticked off to be built in March, and the approvals figures for April and May are the lowest since April 2001.

The state government introduced emergency measures early last month in an effort to kick-start the sector, granting presumed approval to outstanding building applications.

Housing Industry Association WA executive director John Dastlik said sales activity remained strong, averaging around 1,200 per month, and the slowdown was purely to do with the implementation of the Building Act and blockages in the approvals system.

“That’s what worries us, is that we are just stacking more approvals into the system, and for a period of time it will be slow coming out,” Mr Dastlik told WA Business News.

“You have got to understand there are a lot of applications going in.

“Builders are pouring more and more resources into this whole process because it is taking them extra time to get them together before they submit them, so the rate of applications is actually increasing at a higher rate than the rate of permits coming out.

“So we are just blocking the system up more and more. This is a six month exercise that we are three and a half months into.”

Urban Development Institute of Australia WA chief executive Debra Goostrey said the quickest solution to unclog the system would be to remove minor projects that have been included in the Act.

“Industry has recommended that a separate interim process to fast track detached housing and shop fittings approvals as these smaller projects have to currently go through the same rigorous project as large projects, which is clogging up the approvals process,” she said.

Ms Goostrey said the problems in the new homes sector were not limited to the applications process, however.

“Getting titles issued for strata developments at the end of construction is also causing delays as there appears to be no common understanding of the process,” Ms Goostrey said.

“The state government has given every indication that resolving this issue is a very high priority, which is important as the market is now picking up in Perth and we don’t want any artificial supply shortages to occur.”

A report released yesterday by property analysts RP Data indicated Perth’s property market was set to rebound, with median home values jumping by 2 per cent over the past month.