New building approvals data from the Australian Bureau of Statistics for the March 2020 quarter are showing signs of weakness as the COVID-19 pandemic is proving to have a significant, adverse effect on the volume of building work.

For the three months to March, Victoria saw a decrease of 1.7 per cent in total dwelling approvals, due largely to the fall in approvals for apartment/multi-unit dwellings which saw a quarterly fall of 8.1 per cent. The increase in detached housing approvals (3.9 per cent) cushioned much of this decline. However, the marked fall in total dwelling approvals for the month of March compared to February is indicative of the extent to which COVID-19 has adversely affected confidence. The month-to-month change in building approvals for March saw a fall of 25.5 per cent in total dwellings, with apartments/multi-units the key driver in the decline with a fall of 44.9 per cent. In contrast, the detached housing market, which historically has proven to be more resilient to economic pressures compared to the apartment/multi-unit market, total approvals fell marginally, at just 1.7 per cent.

This fall accords with the decline in value of building work approved both in the residential and commercial sector. A total value of $10.4 billion for residential building work approved for the three months to March was 1.4 per cent less compared to the previous quarter. Likewise, there was a decline of total value of commercial building work, with $4.3 billion in the same period – a drop of 1.6 per cent compared to the previous quarter.