Building Approvals — October | By the numbers
- Total dwelling approvals fell by 1.5% in October, in line with market expectations, to 17,070 (prior rev +5.5% from +3.3%). Annually, approvals decelerated further to -13.4% from -12.8%.
- Unit approvals declined by 5.4% in the month to 7,291, which is down by 22.6% on the year.
- House approvals saw a modest increase of 1.7% in October to 9,779 but have fallen by 4.9% across the year.
Building Approvals — October | The details
In mitigation to the 1.5% decline in approvals in October, there were some upward revisions to September's data. Total approvals were initially estimated by the ABS to have increased by 3.3% in September but that was increased to a 5.5% rise in today's data. This was driven by a sharp turnaround for units from -7.8 to 14.5% and houses improved from -2.8% to -0.8%.
Looking through the volatility, October's data was a continuation in the trend of slowing approvals. On a trend basis, approvals fell by 1.1% in October — the 12th consecutive monthly decline — while the annual deceleration increased to -13.9% from -12.5%. Trend unit approvals have also now notched 12 straight monthly declines (-1.9%) to -22.8% on the year. Houses have declined for 8 consecutive months (-0.5%) to -5.7% in annual terms.
Looking through the volatility, October's data was a continuation in the trend of slowing approvals. On a trend basis, approvals fell by 1.1% in October — the 12th consecutive monthly decline — while the annual deceleration increased to -13.9% from -12.5%. Trend unit approvals have also now notched 12 straight monthly declines (-1.9%) to -22.8% on the year. Houses have declined for 8 consecutive months (-0.5%) to -5.7% in annual terms.
The breakdown across the categories of dwellings continues to show a broad-based slowing across houses, high-rise, and low-rise units as highlighted in the chart, below.
The state-based detail is provided in the table, below. October's national result was confirmed with a slowing across all states. Growth in house approvals has lifted only modestly in New South Wales and Victoria over the past year amid a sharp pull back from units. Across the other states, approvals in both houses and units have fallen over the year.
Meanwhile, the value of alterations approved lifted by 0.5% in October to be down by 10% over the year. The value of non-residential approvals increased by 4% in the month but is sharply lower (-24.9%) in annual terms.
Building Approvals — October | Insights
Australian building approvals continue to weaken as tighter financing conditions work towards restricting demand, particularly from investors, with softening property prices also a key headwind. There have also been concerns around oversupply in certain markets across the nation. Overall, in line with the slowing in approvals, residential construction activity appears likely to moderate in 2019, potentially becoming a drag on economic growth.