Building Approvals — June | By the numbers
- Dwelling approvals (including the private and public sectors) declined by more than expected with a 4.9% fall in June (vs the median forecast of -2.8%) to 12,213 — its lowest monthly total since July 2012. In May, approvals fell by 15.8% (revised from -16.4%). Weakness on approvals through the year extended to -15.8% from -10.9%.
- Unit approvals weakened by 3.1% to 4,010 — their lowest since June 2012 — to be down by 30.2% year-on-year.
- House approvals pulled back sharply by 5.8% in June to 8,204 to their lowest monthly total going back to March 2013, with the annual pace sliding to -6.4% from 1.0%.
Building Approvals — June | The details
Total dwelling approvals posted a sharper-than-expected 4.9% fall in June after declines of 15.8% and 2.4% in May and April respectively. As a result, approvals over the June quarter came in at 40,310, which is the lowest quarterly total since Q1 2013, representing a fall of 10.0% from the March quarter of 2020. As the chart (below) shows, this was the steepest quarterly contraction on approvals in 3½ years.
The rollover that came through in the June quarter was led by units (-21.6%qtr), though house approvals also weakened (-2.1%qtr). Unit approvals in Q2 came in at 14,351 — their lowest since Q1 2012 — while house approvals totaled 25,961.
While dwelling approvals weakened in the month, the value of alteration work approved to residential properties lifted noticeably in June rising by 11.4% to $0.708bn, though it was down over Q2 (-9.0%) and through the year (-2.0%). This may be a sign of the impact of the Federal Government's HomeBuilder policy, which offers grants of $25k to eligible owner-occupiers to substantially renovate their home. The value of non-residential work approved also lifted in the month (17.8%) but was down significantly in the quarter (-18.1%) and over the past year (-9.0%).
The chart, below, summarises the state detail with New South Wales recording the sharpest declines of all the states in June (-14.8%), Q2 (-24.5%) and through the year (-31.7%). This is predominantly due to weakness in unit approvals, though house approvals in that state are now starting to rollover.
Building Approvals — June | Insights
Today's data reported a weaker than expected result on dwelling approvals in June following on from weaknesses in recent months. With approvals now down at an 8-year low, this seems to point to some COVID-19-related impacts with the outlook for the broader economy and net overseas migration highly uncertain. The strong uptick in residential alteration could be a sign of rising demand following the Federal Government's announcement of its HomeBuilder policy.
Today's data reported a weaker than expected result on dwelling approvals in June following on from weaknesses in recent months. With approvals now down at an 8-year low, this seems to point to some COVID-19-related impacts with the outlook for the broader economy and net overseas migration highly uncertain. The strong uptick in residential alteration could be a sign of rising demand following the Federal Government's announcement of its HomeBuilder policy.