Australian dwelling approvals ended 2024 slightly missing estimates with a 0.7% rise in December (vs 1.0% expected); however, this was their 4th rise in the past 6 months. Approvals trended higher over the back half of the year from near cycle lows in the first half as approvals in the higher-density segment accelerated. By contrast, house approvals lost momentum into year-end. Overall, approvals remain at low levels as higher interest rates and capacity pressures continue to weigh on home building activity.
A 0.7% lift in December (to 15.1k) saw headline approvals total 45.9k for the final quarter of 2024, up 4.5% on Q3 and their highest quarterly figure in 2 years. This was also the third consecutive quarterly rise in approvals following gains of 4.8% in Q2 and 5.9% in Q3. Key to that momentum has been the unit or higher-density segment; approvals in the segment rose in December (6%) to be up by 21.1% across the quarter (18.6k). That was after an 11.7% rise in Q3 and a modest 1.5% lift in Q2. House approvals were down for the third month running in December (-2.8%), declining by 4.4% for the quarter. That was a clear weakening from the gains seen in Q2 (6.5%) and Q3 (3.0%).
The underlying detail shows that the lift in higher-density approvals has been driven by the high-rise category. In the latest quarter, high-rise approvals surged by 28.4%, which compares to smaller gains in the low-rise (11.2%) and townhouse categories (2.1%).
Looking further into the numbers, the acceleration in high-rise approvals looks to be led by the major two capital cities of Sydney and Melbourne, with Brisbane contributing to a lesser extent.
Alteration approvals were down for the second time in the past 3 months falling 3.7% in December to $1.1bn - still at a very elevated level. For Q4, the value of work approved declined by 1.9%, the first quarterly fall seen since Q1 2023.
