8731.0 - Building Approvals, Australia, Oct 2006

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 04/12/2006

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Explanatory Notes Glossary Abbreviations List of Electronic Tables (Appendix) Revisions to Trend Estimates (What If) Data Source	EXPLANATORY NOTES INTRODUCTION 1 This publication presents monthly details of building work approved. SCOPE AND COVERAGE 2 Statistics of building work approved are compiled from: permits issued by local government authorities and other principal certifying authorities contracts let or day labour work authorised by commonwealth, state, semi-government and local government authorities major building approvals in areas not subject to normal administrative approval e.g. building on remote mine sites. 3 The scope of the survey comprises the following: construction of new buildings alterations and additions to existing buildings approved non-structural renovation and refurbishment work approved installation of integral building fixtures. 4 Excluded from the statistics is construction activity not defined as building (e.g. roads, bridges, railways, earthworks, etc.). Statistics for this activity can be found in Engineering Construction Activity, Australia (cat. no. 8762.0). 5 From July 1990, the statistics include: all approved new residential building valued at $10,000 or more approved alterations and additions to residential building valued at $10,000 or more all approved non-residential building jobs valued at $50,000 or more. VALUE DATA 6 Statistics on the value of building work approved are derived by aggregating the estimated ‘value of building work when completed’ as reported on building approval documents provided to local councils or other building approval authorities. Conceptually these value data should exclude the value of land and landscaping but include site preparation costs. These estimates are usually a reliable indicator of the completed value of ‘houses’. However, for ‘other residential buildings’ and ‘non-residential buildings’, they can differ significantly from the completed value of the building as final costs and contracts have not been established before council approval is sought and gained. 7 The Australian Bureau of Statistics (ABS) generally accepts values provided by approving bodies. Every effort is made to ensure data are provided on a consistent basis, however, there may be instances where value reported does not reflect the building completion value. For example, the reported value for most project homes is the contract price, which may include the cost of site preparation and landscaping. In other cases where a builder is contracted to construct a dwelling based on the owner’s plans, the value may only be the builder’s costs. Some councils do not use the value on approval documents, instead deriving a value based on floor area and type of structure. 8 From July 2000, value data includes the Goods and Services Tax (GST) for residential and non-residential building approvals. The ABS has consulted with councils and other approving authorities to ensure that approval values are reported inclusive of the GST. Where it was identified by a council or other approving authority that approvals submitted from its jurisdiction were on a GST-exclusive basis, the ABS made adjustments to the data to ensure that values were consistent with other data collected and were inclusive of GST. OWNERSHIP 9 Building ownership is classified as either public or private sector and is based on the sector of intended owner of the completed building at the time of approval. Residential buildings constructed by private sector builders under government housing authority schemes are classified as public sector when the authority has contracted, or intends to contract, to purchase the building on or before completion. BUILDING CLASSIFICATION 10 Functional classification of buildings. A building is classified according to its intended major function. Hence a building which is ancillary to other buildings, or forms a part of a group of related buildings, is classified to the function of the building and not to the function of the group as a whole. An example of this can be seen in the treatment of building work approved for a factory complex. In this case, a detached administration building would be classified to Offices, a detached cafeteria building to Retail/wholesale trade, while factory buildings would be classified to Factories. An exception to this rule is the treatment of group accommodation buildings where, for example, a student accommodation building on a university campus would be classified to Educational. The categories included under type of building classifications are defined in the Glossary. 11 In the case of a large multi-function building which, at the time of approval is intended to have more than one purpose (e.g. a hotel/shops/casino project), the ABS endeavours to split the approval details according to each main function. Where this is not possible because separate details cannot be obtained, the building is classified to the predominant function of the building on the basis of the function which represents the highest proportion of the total value of the project. 12 Building approvals are classified both by the Type of Building (e.g. ‘house’, ‘factory’) and by the Type of Work involved (e.g. ‘new’, ‘alterations and additions’ and ‘conversions’). These classifications are often used in conjunction with each other in this publication and are defined in the Glossary. 13 The Type of Work classification refers to the building activity carried out. Conversion jobs are shown separately in tables 9, 10, 19 and 20. However, in other tables they are included within existing categories, as follows: in tables 1 and 2 they are included in the appropriate Type of Building category, and in tables 13, 14 and 24 they are included in the ‘Alterations and additions to residential buildings’ category. SEASONAL ADJUSTMENT 14 Seasonal adjustment is a means of removing the estimated effects of seasonal variation from the series so that the effects of other influences can be more clearly recognised. 15 In the seasonal adjustment of series, account has been taken of both normal seasonal factors and ‘trading day’ effects arising from the varying numbers of Sundays, Mondays, Tuesdays, etc. in the month. Adjustment has also been made for the influence of Easter which may affect the March and April estimates differently. 16 Seasonal adjustment does not remove from the series the effect of irregular or non-seasonal influences (e.g. the approval of large projects or a change in the administrative arrangements of approving authorities). 17 From May 2003, the seasonally adjusted estimates are produced by the concurrent seasonal adjustment method which takes account of the latest available original estimates. The concurrent method improves the estimation of seasonal factors, and therefore, the seasonally adjusted and trend estimates for the current and previous months. As a result of this improvement, revisions to the seasonally adjusted and trend estimates will be observed for recent periods. The estimates that will improve the most will be for the current month, previous month and the same month one year ago. The concurrent seasonal adjustment methodology replaces the forward factor methodology previously used to adjust Building Approval series, where seasonal factors were only revised following an annual reanalysis. 18 The state/territory series have been seasonally adjusted independently. However, a further adjustment has been made to these series to provide coherence between the state/territory estimates and the Australian total estimates. 19 A more detailed review of concurrent seasonal factors will be conducted annually, generally prior to the release of data for May. The timing of this review may vary and when appropriate will be notified in the ‘Data Notes’ section of this publication. TREND ESTIMATES 20 Smoothing seasonally adjusted series reduces the impact of the irregular component of the seasonally adjusted series and creates trend estimates. For monthly series, these trend estimates are derived by applying a 13-term Henderson-weighted moving average to all months of the seasonally adjusted series except the last six months. Trend series are created for the last six months by applying surrogates of the Henderson moving average to the seasonally adjusted series. For the quarterly chain volume measures (table 24), the trend estimates are derived by applying a 7-term Henderson-weighted moving average to all quarters of the respective seasonally adjusted series except the last three quarters. Trend series are created for these last three quarters by applying surrogates of the Henderson moving average seasonally adjusted series. For further information, see Information Paper: A Guide to Interpreting Time Series - Monitoring Trends, 2003 (cat. no. 1349.0) or contact the Assistant Director, Time Series Analysis on Canberra (02) 6252 6540 or email <timeseries@abs.gov.au>. 21 While the smoothing techniques described in paragraph 20 enable trend estimates to be produced for the latest few periods, they do result in revisions to the trend estimates as new data becomes available. Generally, revisions become smaller over time and, after three months, usually have a negligible impact on the series. Revisions to the original data may also lead to revisions to the trend. 22 The ABS produces trend estimates to best represent the underlying behaviour in ABS original estimates. Abnormally high or low values (outliers) are discounted or excluded from the trend estimates. Outliers are considered to be part of the irregular component of the original estimates and, thus, do not conceptually form a part of trend estimates but do appear in the original and seasonally adjusted estimates. Therefore, failure to exclude outliers can result in a distortion to the trend estimates. CHAIN VOLUME MEASURES 23 The chain volume measures appearing in this publication are annually reweighted chain Laspeyres indexes referenced to current price values in a chosen reference year. The reference year is updated annually in the July issue of this publication. While current price estimates reflect both price and volume changes, chain volume estimates measure changes in value after the direct effects of price changes have been eliminated and hence only reflect volume changes. The direct impact of the GST is a price change, and hence is removed from chain volume estimates. Since the value of approvals are more timely than the building price deflators, chain volume measures for the latest quarter are published once an additional month (after the quarter) of building approvals data becomes available. Therefore chain volume measures are updated in the April, July, October and January issues. Further information on the nature and concepts of chain volume measures is contained in the ABS publication Information Paper: Introduction of Chain Volume Measures in the Australian National Accounts (cat. no. 5248.0). AUSTRALIAN STANDARD GEOGRAPHIC CLASSIFICATION (ASGC) 24 Area statistics are now being classified to the Australian Standard Geographical Classification (ASGC), 2006 Edition (cat. no. 1216.0), effective from July 2006. Building work approved before July 2006 was classified according to the current edition of the ASGC at that time, and is presented in this publication unrevised, in the original geographical area that applied at the time of approval. From July 2006, changes were made to the boundary of the Brisbane Statistical Division. 25 From 1 July 2002, approvals in the External Territories of Australia are included in these statistics. Jervis Bay is included in New South Wales, while Christmas Island and Cocos (Keeling) Islands are included in Western Australia. RELATED PUBLICATIONS 26 Users may also wish to refer to the following publications: Building Activity, Australia, cat. no. 8752.0 Dwelling Unit Commencements, Australia, Preliminary, cat. no. 8750.0 Construction Work Done, Australia, Preliminary, cat. no. 8755.0 Engineering Construction Activity, Australia, cat. no. 8762.0 House Price Indexes: Eight Capital Cities, cat. no. 6416.0 Housing Finance, Australia, cat. no. 5609.0 Producer Price Indexes, Australia, cat. no. 6427.0. 27 While building approvals value series are shown inclusive of GST, this is different to building activity - Building Activity, Australia (cat. no. 8752.0) and Construction Work Done, Australia, Preliminary (cat. no. 8755.0) - in which residential work is published inclusive of GST and non-residential work exclusive of GST. In the Engineering Construction Survey - Engineering Construction Activity, Australia (cat. no. 8762.0) all values exclude GST. ABS DATA AVAILABLE ON REQUEST 28 As well as the statistics included in this and related publications, the ABS may have other relevant data available on request. Inquiries should be made to the National Information and Referral Service on 1300 135 070. ROUNDING 29 When figures have been rounded, discrepancies may occur between sums of the component items and totals. Document Selection These documents will be presented in a new window.