Monitor your investment pipeline using non-residential buildings approvals
Last Friday, October 11th, the .id economics team released the latest update to the building approvals data. With this update, users can monitor the latest economic trends in their Local Government Area (LGA).
This blog shows how our economic consultants use this indicator to assess the economic health of an LGA and how it can inform your economic development strategies.
What does the latest data show
According to the Australian Bureau of Statistics (ABS), the total value of building approvals increased by 1.1 per cent in August (trend terms). While the value of residential buildings fell, the value of non-residential building rose 5.7% (trend terms). In fact, the value of non-residential building approved has risen for 12 months. However, the story varies from state to state with most states retreating from previous highs.
How are these trends playing out in your region? Skip ahead for instructions on where to find ‘Buildings Approvals’ data.
For economic development officers who need to understand and plan for jobs and investment, it’s important to monitor the level and the type of building activity happening in your region. Non-residential building approval activity is particularly important as it is a leading indicator of future employment growth. For example, an increase in office building approvals is a leading indicator of business service employment growth.
Need help interpreting the information? Learn more about our economic health checks that provide a clear evidence base for your economic development strategy.
Using building approvals data in economic development
From an economic perspective, building approvals data can be used to:
1. Monitoring the health of the local economy
- To determine the level of private investment activity
- To forecast employment growth in the short term (both construction jobs, but also ongoing employment in office, retail or industrial areas)
- To determine the level of demand for office, retail and industrial floorspace
- To identify the level of housing demand, and potential growth in retail and household services
- To estimate the economic impacts and implications of large building approvals (e.g. you can use the economic impact model to estimate the impacts of a new hospital)
2. Evaluate actions within your economic development strategy.
For example, your economic development strategy seeks to grow professional service jobs but there has been no change in office building approval activity. If this is the case, this issue should be investigated further to determine if it is a demand or supply issue holding back office development.
Case study – Regional NSW
Recently we worked with a regional NSW Council to assess the health of their local economy. As part of our analysis, we identified a sharp decline in the value of non-residential buildings approved and that this posed a risk to local employment generation. Rising unemployment rates in the region further demonstrated the need for action.
One of the actions suggested was to identify projects that could be prioritised or brought forward. The future Building Better Regions Fund was identified as one opportunity to help increase the investment pipeline and support new employment growth.
- Monitor annual trends – as non-residential building activity is lumpy at the LGA level
- Check how the non-residential building pipeline compares to the past
- Look at the breakdown in non-residential building approvals to see whether there is strong/weak demand for certain types of employment generators
- Compare non-residential buildings approvals data with benchmarks to assess discrepancies which may indicate a local barrier to growth, e.g. planning restrictions.
- Use this information in grant submissions to show why your LGA needs projects that can support ongoing employment (if you are using our Grant application guide, step one directs you to Set the strategic context by demonstrating the drivers of your local economy)
You can find out more information about the buildings approvals activity in your local area on economy.id.
First, navigate to the ‘Economic indicators’ menu, and choose ‘Buildings approvals’ (click the screenshot below to enlarge).
If you work in local government and have any questions about this building approvals data, or any of our other upcoming updates, you can contact the .id economics team here or learn more about our economic health checks.