Australian dwelling approvals slid by 8.1% month-on-month in July, remaining around decade lows and falling back near their lowest levels of the year. July's 8.1% fall far exceeded the median estimate for -1% and followed a 7.9% decline in June. Dwelling approvals are now 45.1% below their cycle high from March 2021, the decline reflecting the unwinding of Covid stimulus measures, rising interest rates, earlier falls in housing prices and headwinds in the construction sector.
Approvals in the volatile higher-density segment fell by 19.9% to drive the headline decline, with house or detached approvals broadly flat (-0.1%). Compared to their 2021 peaks, unit approvals are down by 48.4% and house approvals are 43% lower.
With the weakness in July approvals coming almost entirely in the higher-density segment, the disaggregated data is of interest. This indicates the weakness was mainly in the townhouse and high-rise segments.
Approvals fell across most states in July. The major states of New South Wales and Victoria posted declines of 4.7% and 18.3% respectively, driven by the higher-density segment. According to the capital city data, higher-density approvals in Sydney declined by around 20% on the prior month and Melbourne approvals saw a 35.7% pullback.
There has been little movement in approvals over recent months in Western Australia, South Australia and Tasmania; however, Queensland has seen a rebound, albeit approvals in the state weakened in July (-5.5%). A lift in unit approvals in Brisbane have been the key driver, with house approvals in the capital also showing a lift.
