Australian Housing Approvals Plunged Over a Quarter During Omicron Outbreak

This picture shows a construction site in western Sydney, Australia, on July 22, 2021. (Saeed Khan/AFP via Getty Images)

Homebuilding approvals across Australia plummeted in January 2022 due to a higher level of absenteeism and a slower administration process caused by the adverse effects of the COVID-19 Omicron variant.

More specifically, both private sector houses and the more unstable “other dwellings” category witnessed a sharp fall in the number of approvals in January.

According to the data from the Australian Bureau of Statistics released on March 3, the total number of houses approved tumbled 27.9 percent to 12,916 in January compared to last December.

While private sector housing approvals dropped sharply by 17.5 percent to 8,712, other dwellings slumped 43.6 percent to 4,007.

Victoria appeared to be the worst affected state, with a fall of 18.6 percent in the volume of private houses approved and another plunge of 35.5 percent in other forms of dwellings.

Housing Industry Association economist Tom Devitt said the drop in approvals was due to the lack of staff during the Omicron outbreak and a higher than average number of holiday leaves taken.

“The absence of council workers, private certifiers and building business staff will have weighed on the ability to process approvals,” he said.

“There are no indications that home building activity is facing weak demand any time soon, despite temporary interruptions from the Omicron outbreak in January.”

Devitt also expected that the construction sector would witness an above-average volume of approvals in the coming months as the impact of this disruption receded.

A construction site at Marsden Park is seen closed down due to COVID-19 restrictions in Sydney, Australia, on July 19, 2021. (Mark Evans/Getty Images)

In the meantime, construction activity started to improve in February after the peak of the Omicron variant outbreak.

The Australian Industry Group/Housing Industry Association’s performance of construction index increased 7.5 points to 53.4 in the month. A score above 50 points means there was a growth in the construction activity.

Peter Burn, the chief policy advisor of the employers’ organisation Australian Industry Group, said the construction industry saw a healthy improvement in new orders. Additionally, the declining pace in supplier deliveries also reduced, although difficulties in supply chains persisted during the month.

Meanwhile, the Australian economy was showing signs of a more robust recovery from last year’s Delta variant lockdowns in the early months of 2022 as the export sector was thriving and the construction industry started to grow again.

“Omicron has not derailed our economy,” Treasurer Josh Frydenberg told ABC radio on March 3.

Frydenberg said that consumer spending in the first two months of 2022 was four percent higher compared to last year as issues involving workforce absenteeism subsided.

“We’ve seen business conditions improve, business confidence come back, and jobs ads are still more than 30 per cent higher than at the start of the pandemic,” he said.

The latest national accounts indicated that the Australian economy achieved a 46-year high growth of 3.4 percent in the December quarter, following a 1.9 percent contraction in the September 2021 quarter that resulted from the Delta strain lockdowns.