A number of members have asked me recently what the rest of this year might look like from a ‘merchant and frame and truss fabricator point of view’. Simply put, the approvals data suggests a steady detached housing pipeline nationally, but it is a very different story state-by-state.

Over the December quarter, Australia approved roughly 28,000–29,000 detached houses, with monthly approvals sitting around 9,400–9,500 houses. That translates to an annualised pipeline of around 110,000–115,000 detached houses nationally.

That is well below the HomeBuilder peak when approvals briefly exceeded 12,000 houses per month. However, it is broadly consistent with the pre-pandemic market, when approvals typically sat between 7,500 and 9,000 per month.

Looking at the most recent data, December approvals highlight the trend. Total dwelling approvals fell 14.9 per cent to 15,542, but the decline came almost entirely from apartments. Detached house approvals actually increased slightly to 9,487, reinforcing that the core detached market has been relatively stable.

The bigger story appears when you look at the approvals by state.

New South Wales

Detached approvals are currently running at roughly 22,000 houses per year, well below the 35,000-plus approvals seen during the building boom. High land prices, slower greenfield development and tighter finance are continuing to constrain the pipeline.

Victoria

Detached approvals are sitting around 20,000–22,000 per year, compared with more than 33,000 during the peak cycle. Much of the approvals activity in Victoria is now being driven by apartment developments rather than detached housing.

Queensland

Queensland remains the strongest detached housing market in the country. Approvals are running around 25,000–26,000 houses annually, supported by strong population growth and continued demand for greenfield housing.

Western Australia

Approvals have strengthened and are now approaching 18,000–19,000 houses per year, reflecting the tightening housing market and strong population growth.

So, if approvals are the guide to what lies ahead, and historically they are the best early indicator, the outlook for the rest of the year becomes fairly clear.
Queensland should continue to see solid levels of detached housing activity, while Western Australia is likely to see further improvement as its housing shortage continues to drive new approvals.

New South Wales is likely to remain subdued, with detached housing approvals well below the levels seen a few years ago. In Victoria, the market is expected to remain relatively soft in the detached housing segment, with more activity shifting toward higher-density development.

In short, the national detached housing market should remain steady rather than booming, but the experience for merchants and frame and truss plants will depend heavily on where they operate. 

Although the strongest pipelines will remain in Queensland and Western Australia, it seems that NSW and Victoria will continue to work through a much smaller detached housing pipeline than what was experienced during the pandemic building cycle.