Australian dwelling approvals lifted by a much sharper-than-expected 15.4% in the month of September as the momentum in house approvals accelerated with an 11.1% rise. This was actually outpaced by a 25% elevation in unit approvals in the month, though this segment remains well below the level that prevailed before the onset of the pandemic due to significant uncertainty around demand amid border closures.
Building Approvals — September | By the numbers
- Dwelling approvals (private and public sectors, seasonally adjusted) jumped by 15.4% in the month of September to 15,827, with the market forecasting a modest 1.5% rise (August was revised to -2.3%m/m from -1.6%). Annual growth accelerated to 8.8% from a broadly-flat pace of 0.7% in the month prior.
- House approvals are gathering pace, rising for a 3rd straight month, this time by 11.1% in September to 10,466 — its highest level since April 2018 — to be up by 22.1% over the year — a 6½-year high.
- Unit approvals, volatile of late, lifted by 25.0% in September to 5,361, though this was coming from a 14.0% decline in August. Growth through the year is still negative at -10.3% but improved from -18.2% last month.
Building Approvals — September | The details
At a level of a little above 15.8k, Australian dwelling approvals have returned to around where they were before the disruption from the Covid-19 pandemic emerged. The rebound has been uneven with house approvals surging over the period on reopening dynamics and with the benefit of the support of the Federal Government's HomeBuilder scheme to be well above their pre-pandemic level. In contrast, unit approvals have struggled as a rise in vacancy rates and the impact of border closures has understandably led to developers being reluctant to commit to new projects. Dwelling approvals totaled around 43,564 in Q3 for a rise of 6.3% on the shutdown-impacted Q2 (total of 40,987). House approvals drove the way forward advancing by a total of 28,930 over Q3 from 26,190 over Q2 (+10.5%), while unit approvals came to 14,633 in Q3 to be slightly down on Q2's aggregate of 14,796 (-1.1%).
Building Approvals — September | Insights
Dwelling approvals have recovered to their pre-pandemic level helped by the reopening of the national economy from mid-May and the boost provided by the HomeBuilder scheme. The recovery centres on house approvals while unit approvals are struggling amid the uncertainty from border closures and higher vacancy rates in the major capital cities.