Building Approvals — May | By the numbers
- Total dwelling approvals (private and public sectors) lifted by 0.7% in May to 14,436 (seasonally adjusted) compared to the median forecast for a flat outcome (0.0%). Approvals in April were revised to show a 3.4% decline compared to the initially reported 4.7% fall.
- Through the year, dwelling approvals are down by 19.6% (prior rev: -23.4%)
- Unit approvals increased by 2.1% in the month to 5,885 to be down by 27.6% over the year (prior rev: -5.8%m/m, -26.2%Y/Y)
- House approvals eased by 0.2% to 8,551 to slow the annual decline to -13.0% (prior rev: -1.7%m/m, -21.3%Y/Y)
- On a trend basis, total dwelling approvals declined by 0.5% in May and by 20.9% over the year. House approvals fell by 1.4%m/m and -17.0%Y/Y, though unit approvals lifted by 0.7%m/m to be down by 25.6%Y/Y.
Building Approvals — May | The details
May's update showed mixed detail with softness in house approvals and an increase from units. Taking a broader view, the granular detail (not seasonally adjusted) suggests that momentum for house and townhouse approvals continues to ease, though there may be some tentative signs of stabilisation emerging from the high-rise segment.
The state-level data was volatile in May but mostly weak. Approvals remain heavily lower over the year across the nation as shown in the table, below.
The value of approvals for the alteration of existing residential property lifted by 1.0% in the month to $712.1m but is down by 3.0% over the year. Non-residential approvals slipped by 6.7% to $3.78bn, which slowed growth through the year from 17.5% to 5.3%.
Building Approvals — May | Insights
May's report was stronger than anticipated, though this series is typically volatile from month to month. There may be some early indications of stabilisation in unit approvals, but house approvals continue to lose momentum. Markets will have noted the recent improvement in the timely housing market data from auction clearances and prices, though it will take much more that than to have any impact on the residential construction outlook. In that sense, the RBA's June and July rate cuts are a clear positive as is the removal of uncertainty around changes to tax policy following the recent federal election outcome.
