Australian dwelling approvals declined for a third consecutive month, the latest in this stretch being a 6.7% fall in June, in response to the recent expiry of the HomeBuilder scheme. House approvals posted their second double-digit decline in as many months after approvals were brought forward to qualify for the HomeBuilder grants.
Building Approvals — June | By the numbers
- Dwelling approvals (seasonally adjusted) fell by a sharper-than-expected 6.7% in June to 18,911 against expectations for a 4% decline. This was after falls of 5% in April and 7.6% in May. Annual growth slowed from 53.6% to 48.9%.
- House approvals dropped by 11.6% after a 10.3% fall in the month prior to come in at 12,144, which is up 43.3% on a year ago.
- Unit approvals increased by 3.8% in the month to 6,767 (prior month -1.4%) to stand around 60% higher over the year.
Building Approvals — June | The details
Lower density house approvals continue to unwind from record highs following the expiry of the HomeBuilder scheme to new applicants at the end of March. The HomeBuilder scheme has had the effect of bringing forward approvals to qualify for the grants, which were initially set at $25k before lowering to $15k at the start of the year. Further declines for house approvals will follow, but there is already a considerable volume of work now in the pipeline that will add to economic growth over the next few quarters, though lockdowns could shift the timing of this somewhat given their more direct impact on the construction sector in Sydney. House approvals peaked in April at around 15.3k before easing to 13.7k in May followed by June's total of 12.1k. For the quarter, house approvals came in at around 41.2k to be broadly unchanged from Q1 (41.0k). Higher-density or unit approvals came in at 19.9k over the 3-months to June to be up by 6.3% on Q1's aggregate (18.7k).
Overall, this left total approvals 2.3% higher than in the previous quarter, though as the chart below shows, this is only a fraction of the pace of acceleration that the HomeBuilder scheme inspired over the past few quarters.
Approvals for alterations are also unwinding from record highs, though the value of work approved lifted slightly by 2.0% in the month to $0.98bn. A total of $3.05bn of residential renovation work was approved over the 3-month period to June, up by 2.3% from Q1. Work in the non-residential space was weaker in June falling by 3.0% to $4.9bn and also over the quarter (-2.3%).
Turning to the states, house approvals were down widely in June continuing their recent trend. The unwind has been steepest in the states that saw the strongest surges in response to the HomeBuilder scheme. House approvals in June compared to their March levels were down 30.6% in Queensland, 29.4% in Western Australia, 17.4% in Tasmania and 13.6% in New South Wales.
Building Approvals — June | Insights
As expected, dwelling approvals have continued to unwind in the months following the expiry of the HomeBuilder scheme. House approvals are coming down from record high levels and this has been reflected in many states. But the elevated pipeline of residential work is supportive for the economic outlook around some near-term disruptions from lockdowns.
