Residential building approvals in the Northern Territory rose by 29 per cent during the three months ending November last year bucking the nationwide slide brought about by the Reserve Bank of Australia’s rate hikes, the Housing Industry Association has said.

HIA economist Tom Devitt told Mortgage Business the decline of building approvals during the end of 2022 was the “next step in what has been a very well broadcast downturn in the housing market caused by the increase in the cash rate”.

He said that within the first two months of the Reserve Bank of Australia’s interest rate increase, lending indicators of building activity including new home sales began to decrease.

“The decline of building approvals during the end of 2022 is the next step in what has been a very well-broadcast downturn in the housing market caused by the increase in the cash rate,” Mr Devitt said.

“Investors, first home buyers and owner-occupiers started retreating from the housing market,” he said.

The figures for the three months to November were comparisons to the same period in 2021 in seasonally adjusted terms.

The decline in building approvals during the period was led by Western Australia which recorded a 24.4 per cent drop, followed by Queensland, with a decline of 16.8 per cent, New South Wales, 12 per cent; and Victoria reporting a 6.6 per cent decline in approvals.

The Australian Capital Territory reported the biggest fall of 34.8 per cent for the period. South Australia and Tasmania, on the other hand, registered an increase of 6.2 per cent and 7.8 per cent, respectively.

Month-on-month, figures showed that dwelling approvals, on the whole, dropped nine per cent in November 2022, which included a 2.4 per cent decline in detached approvals and a 19.9 per cent reduction in multi-units.

While a Territory Treasury and Finance Department building approvals paper using Australian Bureau of Statistics data showed that in October, the number of residential building approvals in the Territory increased by 3 per cent to 69, the strongest result of the jurisdictions, which otherwise ranged from a decrease of 4 per cent in Tasmania to an increase of 2.2 per cent in Victoria.

“In annual terms, the number of residential building approvals in the Territory increased by 115.6 per cent,” the paper said.

“This was the strongest result of the jurisdictions, which otherwise ranged from a decrease of 45.0 per cent in the Australian Capital Territory to an increase of 0.1 per cent in South Australia.

The paper said that nationally, residential building approvals decreased by 6.9 per cent in the year to October 2022, with residential building approvals in the Territory decreasing by 9.5 per cent to 649, compared with a decrease of 16.7 per cent to 192,646 nationally.

In October 2022, the value of non–residential building approvals in the Territory increased by 159.8 per cent to $117.9 million, the paper said, reflecting an increase of 237.0 per cent in public non–residential building approvals, partly offset by a decrease of 2.1 per cent in private non-residential building approvals.

In December last year, the RBA announced its eighth successive rate hike, which brought the total cash rate to 3.1 per cent — the highest level since 2012.

Mr Devitt said the ABS data could indicate that builders in other parts of Australia had gone through the majority of the pipeline of work which existed in May last year when the RBA started increasing the cash rate.

“This would result in a slowdown in the number of homes being constructed this year,” he said.

“The full impact of the 2022 increases in the cash rate will not be observed until the second half of 2023.”