Building Approvals — September | By the numbers
- Total dwelling approvals (private sector, seasonally adjusted) increased by 2.3% in the month to 16,777 (vs mkt forecast for +3.8%). The annual pace of approvals decelerated further to -14.6% from -12.5%.
- Approvals for houses declined by 2.7%m/m to 9,266 to be down by 7.5% on the year
- Unit approvals lifted by 9.2%m/m to 7,512, which equates to a 21.9% fall over the year
click charts to expand
Building Approvals — September | The details
Taking into account both the private and public sectors, total dwelling approvals were 51,630 for the 3-months to September. This is the lowest quarterly total since Q2 2014. The running 12-month total was 225,479, easing back to the level seen towards the end of 2017.
What is becoming increasingly clear is that with approvals now past their recent peak, there is a broad-based slowdown across all categories of dwellings. The granular data shows that while the slowing has been sharpest in the high-rise category (buildings with 4 or more storeys), house approvals — which are typically the most stable of all dwelling types — are also easing, as are approvals for townhouses and units in low-rise buildings (of between 1-3 storeys).
Looking at approvals on a state-by-state basis, strength in Victoria drove the national headline result, overcoming weakness evident in most other states. Victorian approvals increased by 30.5% in September — entirely reflective of a spike in unit approvals in Melbourne. Elsewhere, seasonally-adjusted approvals declined in the month for; New South Wales -6.8%, Queensland -10.5% and Western Australia -19%. South Australia, however, saw approvals rise by 7.8%.
Building Approvals — September | Insights
The slowdown in approvals likely reflects a range of factors including tighter financing conditions, softening in property prices and concerns of oversupply in certain markets around the nation. Slowing approvals volumes point to reduced residential construction activity, although it is also true that the amount of work currently underway is at elevated levels. It is likely that residential construction will provide only a modest addition to economic activity in the quarters ahead, before possibly becoming a drag on economic activity into next year.
