Quick SnapShot: Dwelling Approvals and Construction Activity in Tasmania
There has been much focus on Tasmania’s economic performance in recent days with the release of the less than favourable Deloitte Access Economics Business Outlook report and the CommSec State of the States Report which suggests that Tasmania is still leading the nation in economic performance, with dwelling approvals being one of the State’s best performing indicators. This blog provides an overview of the most recent data available in relation to dwelling commencements and construction activity in Tasmania.
Importantly, lost in the public discourse relating to the CommSec Report is that the report does not measure and rank economic performance compared with other states and territories, it measures how each state is performing compared with its own historic performance (10 year average) on each of the eight indicators. That is, it measures whether Tasmania is doing better or worse than its 10-year average.
This distinction is important when considering the construction of new residential dwellings in Tasmania.
The ABS provides monthly data for building approvals, and quarterly data for dwelling commencements, dwellings under construction, dwellings approved but not yet commenced and dwelling completed. The latest available data for all is to the March 2023 quarter.
As is evident in the below chart, the number of dwelling approvals and commencements increased considerably between September 2020 and September 2021, following steady numbers since March 2019, with comparable numbers of dwellings being under construction. This period of growth in approvals and commencements correlates with the findings of the CommSec Report, as the numbers of dwellings is considerably above Tasmania’s decade long average of dwelling commencements.
However, since then, the chart shows that starting with the December 2021 quarter the number of dwelling approvals fell sharply, closely followed by commencements in March 2022 until stabilising briefly in the June 2022 to December 2022 quarters before dropping again.
Dwelling completions continued to steadily increase until September 2022 before declining, corresponding to the previous declines in approvals and commencements. Interestingly, the stability of dwellings under construction suggests that dwellings are not being completed as quickly as in the past – the cause of this warrants further investigation. Finance, construction sector labour shortages or building supply constraints could all be contributing to the delay in completions.
Dwellings approved, but not yet commenced, increased steadily over the period as a proportion of total approvals, however, since June 2022, the proportion of approvals, not yet commenced, has been increasing. This suggests the prevalence of additional delays to commencement, perhaps similar to the causes of dwelling completion delays.
To summarise, since June 2021 the number of dwelling approvals and commencements have been declining in Tasmania. Dwelling completions have continued until December 2022, but are now declining and being delayed. Not only are approvals declining, but a higher proportion of those that are approved are delaying commencement of construction activity.
My next blog: More Tasmanians are leaving for interstate than in the past, will be released some time next week. Please subscribe to receive a link.