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Sharp fall in building approvals as floods, war impact supply

Business

The building industry says the sharp fall in new home approvals in South Australia in January is nothing to be concerned about as it continues to battle supply issues that have been exacerbated by floods in the eastern states and war in Ukraine.

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Building approvals for new homes in South Australia reached their lowest level in January for three years with just 548 new houses approved across the state.

Approvals for private sector houses fell in all mainland states with South Australia (-19.9 per cent) experiencing the biggest slump ahead of  Victoria (-18.6 per cent), Western Australia (-16.5 per cent), Queensland (-15.7 per cent) and New South Wales (-14.0 per cent) in seasonally adjusted terms.

It was the lowest number of houses approved in SA since January 2019 and was significantly down on the 773 approved in December.

Australian Bureau of Statistics figures released last week showed that more than 70 per cent of the approvals were in the Greater Adelaide region, but were dominated by peri-urban locations such as Munno Para West/Angle Vale (59), Fleurieu Peninsula (42), Mount Barker (21), Gawler South (17) and Two Wells (21).

Master Builders SA CEO Will Frogley said the flood of building approvals in the second half of 2020 and last year meant there was still plenty of work in the pipeline “so we’re not concerned about the level of building approvals”.

However, he said the supply of some structural timber, gyprock and steel products from Europe were being impacted by Russia-Ukraine war.

“There’s definitely plenty of work for the whole year – everyone is still really busy but the big issue at the moment is still getting trades and materials and what hasn’t helped is the floods in the eastern states combined with the situation in Ukraine because that’s further constricting supply,” Frogley said.

“Supply has been a real issue for the past 18 months but those two events will make it even worse and that’s going to be a really big challenge for the industry for this whole year.

“Our challenge at the moment is not lack of demand, it’s trying to manage all the demand we’ve got and we just keep getting thrown these curveballs.”

For the past 30 years, there have been between about 6500 and 8500 new homes built in South Australia annually.

But the HomeBuilder scheme introduced following the onset of the COVID-19 pandemic in mid-2020 resulted in 11,278 new builds in 2020 and is expected to hit a record when 2021 figures are finalised in coming weeks.

Last year, a shortage of materials such as structural timber threatened to derail the boom and in January and February a shortage of labour became a major issue when scores of building workers were forced to isolate as the Omicron wave of COVID-19 swept the state.

Frogley said the recent floods would likely impact the supply of material from the eastern states and create extra demand for materials interstate as the rebuild got underway.

He said the floods, combined with supply issues from Europe threatened to blowout building times for the sector that was already under pressure.

“It’s a definite risk,” Frogley said.

“It’s often challenging for South Australia when we’re competing against New South Wales, Queensland and Victoria so that just makes it more challenging again.”

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