Australian dwelling approvals fell to an 11-year low in April as rising interest rates, earlier falls in housing prices and weak sentiment continue to impact the home building sector. Approvals have halved over the past couple of years as the sector has been working through record numbers of houses in the pipeline.
Building Approvals — April | By the numbers
- Dwelling approvals (seasonally adjusted) fell by 8.1% (vs 2% exp) in April to 11,594, its lowest since April 2012. Approvals declined by 24.1% over the year and are now 50.1% below the cycle high in March 2021.
- House approvals were down 3.6% on the month to 8,049 (-18.2%yr), remaining around decade lows.
- Unit approvals declined by 16.9% to 3,545 (-34.9%yr), the lowest monthly total going back to January 2012.
Building Approvals — April | The details
A further decline in the month of April saw dwelling approvals fall to their lowest level in 11 years at around 11.6k. Approvals have halved from their March 2021 peak; the unwind set in well in advance of the RBA's rate-hiking cycle (from May-22) following the earlier conclusion of construction stimulus measures from state and federal governments as part of their economic response to the pandemic.
3-month (average) approvals for houses have fallen to around 8.3k, their lowest in 10 years. Unit approvals held up around 6k (3-month average basis) throughout last year but have dropped away sharply in 2023, falling to around the 4k range; high-rise and townhouse approvals have been prominent in that slide.
Approvals for renovations (nominal terms) remain at an elevated level ($0.95bn) in April; however, the national accounts (next edition is due next week) have reported that the volume of work has been falling over recent quarters. Cost pressures, therefore, are keeping these approvals elevated.
Building Approvals — April | Insights
Another weak report for dwelling approvals today, which (if anything) suggests the unwind has accelerated through the early part of 2023. Approvals have more than reversed the stimulus-driven surge they saw in the recovery from the pandemic recession. Rising interest rates, a downswing in housing prices and weak sentiment have combined with the earlier conclusion of construction subsidies to drive approvals lower. Approvals are adding little to the pipeline at time when population growth post the pandemic is ramping up.
