Building Approvals, Australia methodology

The monthly Building Approvals (BAPS) collection collects data relating to residential and non-residential building work above certain value limits that have been approved within the reference month. Data from this collection is an important leading economic indicator of future building activity. It also provides the sampling framework for the quarterly Building Activity Survey, which is a major contributor to the quarterly National Accounts estimates.

Building Approval statistics are used extensively by both public and private sector organisations to monitor economic activity, employment and investment.

The scope of the collection comprises the following approvals:

• construction of new buildings;
• alterations and additions to existing buildings;
• non-structural renovation and refurbishment work;
• installation of integral building fixtures; and
• full demolitions of existing dwellings.

For the purposes of this collection, a building is a rigid, fixed and permanent structure which has a roof. Its intended purpose is primarily to house people, plant, machinery, vehicles, goods or livestock. An integral feature of a building's design is the provision for regular access by persons in order to satisfy its intended use.

Construction activity not defined as building (e.g. roads, bridges, railways, earthworks, etc.) are excluded. Statistics for this activity can be found in Engineering Construction Activity, Australia.

Data collected are available as part of the normal administrative building approval process, and are generally readily available from the relevant local government or other approving authority.

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; and
• information about major building projects that are not subject to normal administrative approval e.g. building on remote mine sites. These projects may be sourced through media reports and the Building Activity Survey.

The coverage of these statistics has changed over time:

• From July 1990, the statistics include all approved residential building valued at $10,000 or more and all approved non-residential building valued at $50,000 or more.
• From July 1988 to June 1990, the statistics include all approved residential building valued at $10,000 or more and all approved non-residential building valued at $30,000 or more.
• From July 1975 to June 1988, the statistics include all approved residential and non-residential building valued at $10,000 or more.
• Up to June 1975, the statistics include all approved new building, and alterations and additions involving a structural change or floor area expansion.

Building approvals are classified by Type of Building (e.g. 'residential', 'non-residential') and by Type of Work.

Type of Building is the building's intended predominant function according to the ABS Functional Classification of Buildings 1999 (Revision 2021).

• Except where specified in the Functional Classification of Buildings, 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. For example, in the case of a factory complex, 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.
• For a significant 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.

Type of Work consists of 'new', 'alterations and additions', and 'conversions'. Conversions are considered to be a special type of alteration, and these jobs have been separately identified as such from the July 1996 reference month, though they have only appeared separately in this publication from the January 1998 issue. Prior to that issue, conversions were published as part of the 'Conversions, etc.' category or included elsewhere within a table.

Building ownership is classified as either public or private sector and is based on the sector of the 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.

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, demolition and landscaping but include site preparation costs associated with building activity. These estimates are usually a reliable indicator of the completed value of ‘houses’. However, for other buildings they can differ significantly from the completed value of the building as final costs and contracts have often not been established before council approval is sought and gained.

The 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 data providers do not use the value on approval documents, instead deriving a value based on floor area and type of structure.

From July 2000, value data includes the Goods and Services Tax (GST) for residential and non-residential building approvals.

Seasonal adjustment is a means of removing the estimated effects of seasonal and calendar related variation from a series so that the effects of other influences can be more clearly recognised. It does not remove the effect of irregular or other influences (e.g. the approval of large projects or a change in the administrative arrangements of approving authorities).

State/territory series are seasonally adjusted independently of the Australian series. In general, the sum of the state/territory estimates are reconciled to equal the Australian total estimates.

Seasonally adjusted estimates are produced by a seasonal adjustment method which takes account of the latest available original estimates. A detailed review of seasonal factors is 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.

Seasonally adjusted estimates may be revised as new periods of data become available. Generally, revisions become smaller over time. Revisions to original data may also lead to revisions to seasonally adjusted estimates.

Care should be exercised when using the seasonally adjusted value of non-residential building jobs at the state level, due to the difficulties in estimating the seasonal pattern for these data series.

Further information on seasonally adjusted estimates can be found in the ABS Information paper Time Series Analysis Frequently Asked Questions, 2003.

Estimates in this publication are rounded which may result in discrepancies between the sums of component items and their totals. Percentage movements are calculated from data at the level of precision presented in this publication i.e. to the nearest integer for 'Number of dwellings' data, and to the nearest $1,000 for 'Value of approval' data.

In some series relating to the number of dwellings, there are discrepancies between the sums of component items (state/territory) and their totals (Australia). This affects data in some months from July 1983 to July 1985, where original unit record data is no longer available to correct the aggregation. Where a discrepancy occurs, the state/territory-level data will be more accurate.

Chain volume estimates reflect changes in the volume of building work approved after the direct effects of price changes have been eliminated. The chain volume measures appearing in this publication are annually reweighted chain Laspeyres indexes referenced to current price values in a chosen reference year.

Chain volume measures do not, in general, sum exactly to the extrapolated total value of the components. Further information on the nature and concepts of chain volume measures is contained in the ABS Information Paper Australian National Accounts, Introduction of Chain Volume Measures and Price Indexes, September 1997.

The Building Approvals collection is a census and hence is not subject to sampling error. However, issues such as coverage of reporting authorities and completeness and timeliness of reporting, as well as the quality of the data reported, do exist.

Building Approvals data is collected as an administrative by-product from local government and other reporting authorities and can be sensitive to changes in legislation and administrative practices which can vary from state to state.

The introduction of private certification introduced another step in the building approval process. Private certifiers lodge approval details with reporting authorities, who then load them to their systems and report all building approvals in their jurisdiction to the ABS. This extra step can cause a lag in the provision of building approvals to the ABS. This can mean, for some authorities, that complete data for a particular month is not available until the following month.

Revisions as a result of data collection problems are made to Building Approval estimates. There are a number of reasons for data collection problems such as reporting authorities experiencing problems with their processing systems, reporting incomplete data and not reporting within the correct time frame. In these cases an estimate is included for that month. Overall, revisions are generally confined to the last 12-18 months, depending on their significance.

Value data reported for houses are generally a reliable indicator of the completed value, but for 'other residential buildings' and 'non-residential buildings' they can differ significantly from the completed value of the building. This is because final costs and contracts have not been established before council approval is gained.

The information provided to the ABS and included in estimates for any month may be revised or corrected in later months. This can occur as a result of corrections made by a provider of data, the late provision of approval records and, occasionally, by approvals being identified after construction work has commenced. Where revisions or corrections are made to the original data for prior months, the aggregate impact on dwelling approval estimates are provided in the 'Main features' section under 'Revisions this month'.

Building Approvals, Australia is released monthly, 4-5 weeks after the first day of the reference month. A supplementary release of small area data (for Statistical Area Level 2 and Local Government Areas) occurs five working days after the main publication is released, in an 'Additional Information'. Small area Excel datacubes and CSV files are released five business days after the main publication. 

Release dates are published in ABS Release Advice.

Chain volume measures are released quarterly in the April, July, October and January issues. The reference year is updated annually in the October issue.

The major series estimates for this collection are available in original, seasonally adjusted and trend series.

The publications contain monthly information on the number of dwelling units and value of new residential buildings (houses and other residential), for private and public sector, value of alterations and additions to residential buildings and value of non-residential building by class of building (eg, hotels, offices, etc.) approved. They also contain seasonally adjusted and trend estimates for the number of dwelling units and value of building approved, as well as quarterly values of building approved in chain volume measures, with the reference year being the year prior to the latest complete financial year.

The publication includes a range of commentary and analysis for users in the 'Main features' section each month. In addition, the publication includes a number of Excel workbooks available in the 'Downloads' tab.

Statistical Area Level 1 (SA1) data is available by request as a charged consultancy. 

The files under the 'Data downloads' heading contain data for small geographic areas in Excel and CSV (contained within .zip files) formats. Excel files contain data for a financial year whereas CSV files contain data for individual months.

Please note that Building Approvals data are subject to revision. Data is re-released each month including data for the latest month and revisions to data for previous months.

Note that the estimates for small areas vary from month to month and caution should be used in drawing conclusions from monthly movements.

A number of time series spreadsheets contain ‘np’ (not available for publication) annotations. This is due to confidential data being contained in these series.

Building approvals are classified to the Australian Statistical Geography Standard (ASGS), 2016 Edition, effective from July 2011. Data from July 2001 to June 2011 is classified according to the 2011 edition of the ASGS.

From 1 July 2002, approvals in the Territories of Jervis Bay, Christmas Island and Cocos (Keeling) Islands 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. This differs to their treatment in the ASGS, where these Territories are included in 'Other Territories'.

Building approvals data is administrative by-product data that is available to the general public. However, the data is collected under authority of the Census and Statistics Act, and data published or made available can relate to individual building jobs approved. Information relating to individual approvals can be released under clause 11 (1) (d) of the Statistics Determination 2018.

If the information you require is not available as a standard product or service, then ABS Consultancy Services can help you with customised services to suit your needs. Inquiries should be made to the National Information and Referral Service on 1300 135 070. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.

The trend series attempts to measure underlying behaviour in building approval activity. In the short term, this measurement will be significantly affected by changes to regular patterns in approval activity during this time of the COVID-19 pandemic, as potential home builders faced uncertainty initially, followed by the introduction of government stimulus measures. If the trend estimates in this publication were to be calculated without fully accounting for this irregular event, they would likely provide a misleading view of underlying approval activity.

The Building Approvals monthly trend series have therefore been suspended starting from May 2020, while the quarterly series have been suspended from the June 2020 quarter. The trend series will be reinstated when more certainty emerges in the underlying trend.

Building Approvals used the concurrent seasonal adjustment method up to and including April 2020, meaning that seasonal factors were re-estimated each time a new data point becomes available. If not appropriately accounted for, unusual real-world events, such as COVID-19, can distort estimates calculated using this method. From May 2020 to April 2021, seasonal factors were calculated using data up to and including April 2020, then projected from May 2020 onwards. From May 2021, seasonal factors are being calculated using data up to and including April 2021, then projected from May 2021 onwards. This approach, known as the forward factor method, ensures that the seasonal factors are not distorted by COVID-19 impacts.

An update to the ABS' Functional Classification of Buildings (FCB) was published on 21 January 2021.  The updated classification was adopted in the January 2021 release of Building Approvals. 

The updated classification splits "Flats, units or apartments - In a block of four or more storeys" into two categories: "Apartments - In a four to eight storey block" and "Apartments - In a nine or more storey block". Data for the "four or more storeys" category will continue to be reported in the time series spreadsheets. Data is available for the two new categories from the July 2016 month onwards. In addition to the time series spreadsheets, these categories will be included in the small-area CSV files and ABS.Stat.