Australian dwelling approvals declined further in April, driven by the higher density segment. House approvals steadied in the month and may be finding a base after retracing from their stimulus-driven peak in 2021.
Building Approvals — April | By the numbers
- National dwelling approvals (seasonally adjusted) fell by 2.4% in April to 14,908, missing expectations for a 2% rise. March approvals were revised to show a larger fall of 19.2%, from -18.5% initially reported. Approvals are now 32.4% lower over the year.
- House approvals steadied with a 0.4% increase to 10,154 (-33.7%yr) after falling by 4.1% in March.
- Unit approvals extended March's 38.3% decline falling by a further 7.9% in April to 4,755 (-29.5%yr)
Building Approvals — April | The details
National dwelling approvals were down 2.4% in the month of April coming on the back of a steep decline in March (-19.2%). Approvals have been highly volatile in 2022 with some very large month-on-month movements. Taking a 3-month average to smooth out the volatility, approvals appear to be steading around the 16,000 level. This compares with the recent peak of around 22,000, boosted by the HomeBuilder program and other stimulus measures during the Covid period. The 3-month average measures suggest detached approvals may have based, while higher density approvals are down from their peak and tracking sideways.
Across the states, there were largely offsetting moves in approvals in the month in New South Wales (-6.8%) and Victoria (7.8%). Both Queensland (-4.5%) and Western Australia (-0.3%) weakened after rising in March. Rebounds were posted in South Australia (50.3%) and Tasmania (10.6%).
Alteration approvals lifted by 6.6% to around $1bn. Although the HomeBuilder subsidy concluded in mid-April 2021, alteration approvals have stayed at elevated levels, likely due to escalating materials and labour costs pushing up the price of renovations.
Building Approvals — April | Insights
After declining by around 5% over the first quarter, dwelling approvals saw further weakness with a 2.4% decline coming through in April. Aside from a weak reading in January, house approvals have held in the 10-11k range over the past 8 months. Higher density approvals have been highly volatile over recent months, making it difficult to draw conclusions. Following the elevation in approvals between mid-2020 to mid-2021, the focus is now on the completion of work in the pipeline, which is running up against capacity constraints in the construction sector.
