Slowing Australian building approvals accelerated in August following a sharp decline in unit approvals according to data released by the ABS today.
Building Approvals — August | By the numbers
- Total Dwelling Approvals (all sectors) fell -9.4%m/m to 16,477 (seasonally adjusted) in stark contrast to the market forecast for a rise of +1%. July’s decline initially reported at -5.2%m/m was upgraded to -4.6% on revision.
- House Approvals fell -1.7% to 9,664, which follows a -2.6% decline in July.
- Unit Approvals declined sharply by -18.4% to 6,813. Last month’s decline was -7%.
Building Approvals — August | The details
The headline fall of 9.4% in August was particularly sharp and was the most severe monthly contraction since December last year. While the seasonally adjusted data are highly volatile month-to-month, the trend series has now declined for 9 consecutive months, after recording a further 1.9% fall in August. Through the year, building approvals have declined by 13.6% and are 9.1% lower in trend terms. The slowdown is being driven mostly by weakening unit approvals, although house approvals have also softened recently.
For unit approvals, the sharp fall in August (-18.4%m/m) was mainly due to weakness from the high-rise segment in Sydney and Melbourne. For houses (-1.7%m/m), approvals declined in New South Wales (-3.7%), Queensland (-6.1%) and Western Australia (-0.9%). The breakdown of the state detail is shown in the table, below.
|
State
|
August (m/m)
|
Annual (Y/Y)
|
|
NSW
|
-2.7%
|
-12.8%
|
|
VIC
|
-12.0%
|
-17.3%
|
|
QLD
|
-8.4%
|
-16.1%
|
|
SA
|
+9.6%
|
-4.6%
|
|
WA
|
+14.7%
|
+7.0%
|
|
TAS
|
-18.6%
|
4.9%
|
|
AUS
|
-9.4%
|
-13.6%
|
Based on ABS 8,731.0
The ABS also reported that the value of non-residential building approved fell 24.5% in August, while the value of alterations and additions fell 3.3%m/m.
Building Approvals — August | Insights
Momentum in building approvals continues to ease, which matches with the broader context of declining property prices and tightening credit conditions. While population growth remains strong, particularly in New South Wales and Victoria, the pipeline of projects is being worked through after the upswing in activity over the past few years. This points to a forthcoming softening in residential construction activity, which saw a strong first half of 2018 contributing 0.3ppt to GDP growth
Momentum in building approvals continues to ease, which matches with the broader context of declining property prices and tightening credit conditions. While population growth remains strong, particularly in New South Wales and Victoria, the pipeline of projects is being worked through after the upswing in activity over the past few years. This points to a forthcoming softening in residential construction activity, which saw a strong first half of 2018 contributing 0.3ppt to GDP growth
