Building Approvals — January | By the numbers
- Dwelling approvals (including the private and public sectors) on a seasonally adjusted basis fell by 15.3% in January to 13,016, whereas the market had anticipated a 1.0% rise. Approvals in December were revised to show a 3.9% lift in January from a -0.2% result initially reported.
- On that result, dwelling approvals in annual terms swung from +7.2% (revised from +2.7%) to -11.3%.
- House approvals increased by 0.5% in January to 8,732 (prior rev: +1.0%), though the annual decline steepened from -5.9% to -8.2%.
- Unit approvals had posted strong gains in the previous two months but fell by 35.8% in January to 4,284 (prior rev: +8.0%) as annual growth stepped down from +30.8% to -16.8%.
Building Approvals — January | The details
Dwelling approvals made a volatile start to 2020 with a sharp contraction in January. This was driven entirely by the unit segment, with the underlying detail pointing to a drag from high-rise units.
The state-based results are shown in the table, below. Clearly, January's weakness was centred in Victoria, though this comes after recent strength in that state in the unit segment. Approvals in South Australia and Western Australia also showed declines in the month. New South Wales posted a 3.6% rise in January, though approvals have been volatile in recent months, while Queensland advanced by 8.7%m/m after falls in each of the three months prior.
The state-based results are shown in the table, below. Clearly, January's weakness was centred in Victoria, though this comes after recent strength in that state in the unit segment. Approvals in South Australia and Western Australia also showed declines in the month. New South Wales posted a 3.6% rise in January, though approvals have been volatile in recent months, while Queensland advanced by 8.7%m/m after falls in each of the three months prior.
The value of alteration work approved to existing residential properties posted its fastest monthly rise of 7.2% since mid 2018 rising to $730.7m (5.4%yr). Non-residential approvals increased by 5.2% to $4.642bn (23.9%yr).
Building Approvals — January | Insights
Certainly, this was a very volatile result driven by a pullback in the high-rise unit segment after recent strength. Furthermore, timing may have amplified this volatility, with sizeable moves in January not uncommon. Overall, house approvals appear to be stabilising but they remain volatile for units. Further data will be needed to determine whether more weakness comes through, particularly with risks around activity due to the coronavirus now prevalent, or if the positive trend towards the end of 2019 resumes.
Certainly, this was a very volatile result driven by a pullback in the high-rise unit segment after recent strength. Furthermore, timing may have amplified this volatility, with sizeable moves in January not uncommon. Overall, house approvals appear to be stabilising but they remain volatile for units. Further data will be needed to determine whether more weakness comes through, particularly with risks around activity due to the coronavirus now prevalent, or if the positive trend towards the end of 2019 resumes.