Building Approvals — August | By the numbers
- Total dwelling approvals (including the private and public sectors) on a seasonally adjusted basis fell by 1.1% in August to 12,817 disappointing the median forecast for a 2% rise. In the previous month, approvals fell by a sizeable 9.7%.
- Approvals over the past year are down by 21.5%, slowing from a 28.2% decline in July.
- Unit approvals increased by 1.5% in August to 4,674, which follows a volatile 19.7% fall in the previous month. The pace of decline over the past year now stands at -28.2% compared to -43.3% in July.
- House approvals fell by 2.6% in the month (prior rev: -2.9%) to 8,143 to be down by 17.1% through the year (prior rev -16.0%).
- On a trend basis, total dwelling approvals fell by 3.9% in August to be down by 25.6% year-on-year, with houses -1.0%m/m and -15.8%Y/Y and units -8.9%m/m and -38.5%Y/Y.
Building Approvals — August | The details
The total level of dwelling approvals fell to a 6½-year low after taking a further step lower in August. House approvals at around 8,100 are at their lowest level since early 2013, while unit approvals have retraced to the level that prevailed around early 2012. In trend terms, the recent peak in total approvals came in late 2017 (November to be precise) at around 19,900. Thus, the decline from the peak currently stands at 35.3%. A similar analysis has house approvals down by 20.8% from their early-2018 peak, while unit approvals have halved (-52.4%) from their most recent peak in late 2017. Given the recent weakness in approvals, it is likely that a stabilisation is still a number of months away and appears unlikely to occur before Q1 next year.
The monthly state details were again highly volatile, with New South Wales leading with a 10.6% rise followed by Victoria (+6.5%), Tasmania (+4.4%) and Western Australia (+4.2%). However, there were sizeable declines in Queensland (-21.4%) and South Australia (-29.7%). In trend terms, approvals growth over the past remain heavily negative in all states as per the chart, below.
Lastly, the value of alteration work to existing residential properties fell by 4.5% in the month to $689.1m (-0.3%Y/Y). The value of non-residential work approved, which is a volatile series, surged in August (+54%) to $6.1bn continuing its recent uptrend.
Building Approvals — August | Insights
This was another weak update for building approvals that extends the run of negative annual growth out to 14 months. As such, residential construction activity is likely to remain a headwind to economic growth over the remainder of 2019 and then into 2020.
