Australian dwelling approvals rebounded by 7% in August (vs 2.5% expected) following steep declines in June (-8.6%) and July (-7.4%). Approvals still, however, remain at low levels amid strong headwinds being faced by the construction sector from rising interest rates, capacity and cost pressures and weak sentiment.
House (6%) and unit approvals (8.8%) lifted in August, only the second time in the past 12 months that both segments have risen together. For house approvals, this was its strongest rise since February. However, the bigger picture is that these approvals are down by more than 39% from their cycle high in early 2021.
Higher-density approvals - inherently volatile - were up 8.8% coming off the back of falls just shy of 19% in June and July. Trends in approvals for this segment remain negative, particularly for high-rise developments.
Approvals lifted across most states in August; however, Queensland was a notable exception seeing a large decline (-26.9%). Gains in New South Wales (12.5%) and Victoria (22.2%) were supported by capital city unit approvals, with house approvals also advancing.
Alteration approvals eased back by 2.4% for the month but remained comfortably above the $1bn line, as has been the case for much of the period since early 2021. Strong demand for alterations during the pandemic and elevated construction and materials costs have been contributing factors.
