Building Approvals — March | By the numbers
- Dwelling approvals (including the private and public sectors) fell by 4.0% to 15,279 (seasonally adjusted) in the month of March; much less than the 15.0% fall expected by markets. Approvals in February surged by 19.4% (revised from 19.9%).
- In annual terms, approvals growth lifted from -4.6% to 0.2% due to an 8.6% decline from March 2019 falling out of the calculation.
- House approvals posted back to back declines with a 0.6% fall in March to 8,614 after a 1.2% slide in February (revised from -1.7%). Approvals over the year are down by -2.1%.
- Unit approvals have been highly volatile in 2020 making the 8.0% fall reported today for March (to 6,665) look calm by comparison. This follows a 31.9% fall in January and a 58.9% acceleration in February. Growth in annual terms turned positive for the first time since December 2019 to 3.4% from -5.2%.
Building Approvals — March | The details
March's result surprised by posting a relatively modest fall of 4.0% in the month against expectations for a much larger decline of 15.0%. Overall, it was a volatile quarter making it difficult to establish the underlying trend. While the summer bushfires had some impact on January's numbers that faded by February and in today's release the ABS had not found any discernible impact due to the COVID-19 crisis. Total approvals lifted by a modest 1.8% in March quarter, broadly reflected across the house (1.9%qtr) and unit segments (1.5%qtr). This follows a solid 6.7% rise in the final quarter of 2019 that at the time provided some optimism for the residential construction outlook, though approvals are now likely to come under extreme pressure in Q2 due to delays in existing construction work and elevated uncertainty over the state of the housing market with transactions plunging to very low levels in response to the prohibition on auctions and open house inspections and overseas migration effectively looking to be off the cards for a while to come.
March's result surprised by posting a relatively modest fall of 4.0% in the month against expectations for a much larger decline of 15.0%. Overall, it was a volatile quarter making it difficult to establish the underlying trend. While the summer bushfires had some impact on January's numbers that faded by February and in today's release the ABS had not found any discernible impact due to the COVID-19 crisis. Total approvals lifted by a modest 1.8% in March quarter, broadly reflected across the house (1.9%qtr) and unit segments (1.5%qtr). This follows a solid 6.7% rise in the final quarter of 2019 that at the time provided some optimism for the residential construction outlook, though approvals are now likely to come under extreme pressure in Q2 due to delays in existing construction work and elevated uncertainty over the state of the housing market with transactions plunging to very low levels in response to the prohibition on auctions and open house inspections and overseas migration effectively looking to be off the cards for a while to come.
The state details are provided in the table below with sizeable moves coming through from New South Wales and Victoria. Approvals in Queensland, South Australia and Western Australia remained weak but were holding up in Tasmania.
Nationally approvals were up by 1.8% in the March quarter, but as this next chart shows that was driven in the main by a strong 16.5% rise in New South Wales, while Tasmanian approvals also advanced 6.1% in Q1. Incidentally, these are the only two states to have increased approvals over the year. Elsewhere, approvals across the quarter declined in Victoria (-1.7%), Queensland (-0.8%), South Australia (-19.1%) and Western Australia (-1.8%).
Also of note in today's release, the value of alteration work approved to existing residential properties lifted by 3.3% to $0.714bn (-3.8%yr). In the non-residential segment, the value of work approved declined for a second straight month falling by 7.3% to $4.019bn (-5.3%yr).
Building Approvals — March | Insights
Approvals lifted modestly over the March quarter around some volatile monthly outcomes, most notably in the unit segment. The disruptions associated with COVID-19 are likely to weigh on approvals significantly through the June quarter and will intensify the headwinds for the residential construction sector.