Building Approvals — June | By the numbers
- Total dwelling approvals (including the private and public sectors) fell by 1.2% in June to 14,295 (seasonally adjusted) coming against market expectations for a 0.2% rise. Last month's initially reported increase of 0.7% was revised down to 0.3%.
- The decline in dwelling approvals over the year accelerated from -19.2% (revised from -19.6%) to -25.6%.
- Unit approvals recorded a 3.9% fall in June (prior rev: +0.7%) to 5,608 to be down by 38.1% through the year (prior rev: -27.9%)
- Approvals for houses lifted by 0.5% in the month (prior rev: +0.1%) to 8,687, though the annual decline steepened to -14.5% from -12.0%.
- In trend terms, total dwelling approvals fell by 1.3% in June and by 20.9% over the year, with houses -0.8%m/m and -15.2%Y/Y and units -2.0%m/m and -27.8%Y/Y.
Building Approvals — June | The details
In the June quarter, total approvals fell by 7.3% to an aggregate of 43,197 (seasonally adjusted). That followed a 0.9% rise in Q1, but that was an aberration given that as per the chart (below), approvals have declined in 5 of the past 6 quarters. The detail in Q2 was; houses 25,961 (-4.4%q/q) and units 17,236 (-11.2%q/q).
Looking at the granular detail (which is not seasonally adjusted) over the past 3 months, the aggregate for houses picked up by 4.1% compared to the total from March, while townhouses posted a relatively modest 1.2% rise. The low-rise unit category increased by 9.5% over the quarter, though the high-rise segment saw an 8.7% decline.
The state-based detail was broadly weak in June and over Q2. Only Victoria recorded an increase in total approvals in the month (+9.7%), while Queensland was the only state to post a quarterly increase (+4.3%). Approvals in most states remain sharply down on a year earlier.
The table (below) provides a more in-depth breakdown of the headline details for the states in June and over the year.
The value of alteration work to existing residential properties lifted by 1.2% in June to $725.3m to back up a 1% rise in the previous month. Over the year, the value of work approved swung from -2.1% in May to +9.3% in June. In the non-residential category, the value of work approved jumped by 9.6% in the month to $4.13bn to be up by 23.7% over the year.
Building Approvals — June | Insights
Buoyed by the recent interest rate cuts from the Reserve Bank of Australia, May's federal election outcome and banking regulator APRA easing its guidance around loan serviceability criteria, sentiment in the housing market has undoubtedly improved. That is highlighted by the outturns from recent auction clearance rates, CoreLogic's price data and the detail from Westpac-Melbourne Institute's Consumer Sentiment Index. Notwithstanding, the outlook for residential construction activity remains weak for the remainder of 2019 and then into 2020 (see chart, below).
