Australian dwelling approvals lifted by 1.6% for the month in November following October's surprise 7.2% rise (revised from 7.5%). Approvals defied expectations for a 2% decline in today's report, putting back-to-back gains together for the first time since February-March 2023. Unit approvals (7.2%) drove the increase - as they did in October (16.8%) - while house approvals (-1.9%) reversed their lift from the prior month.
After lifting to a 5-month high in October (14.3k), dwelling approvals advanced by a further 1.6% in November (14.5k). However, approvals continue to remain at low levels, down around 37% from cycle highs in early 2021 and 4.6% below their level from 12 months ago. Higher interest rates are weighing on home-building activity, while builders also remain stretched in working to complete record numbers of homes under construction in the pipeline. Rising housing prices and pressure on the existing housing stock from rapid post-pandemic population growth have yet to translate into turning the tide on the downtrend in approvals.
Detached housing approvals have stabilised after unwinding from their highs, averaging around 8.5k per month through the back half of the year to date. That compares with an average of 8.3k per month in the first half. Victoria and Western Australia are two states that have seen house approvals trend higher through the second half of the year.
In the unit or higher-density segment, the chart below shows the rise in approvals in October (16.8%) and now November (7.2%) has largely been driven by the high-rise category. But this is a very volatile component and is thus difficult to draw signal from.
In the alterations segment, the value of renovation work approved continues to remain at elevated levels, well above the $1bn line. This partly reflects that the cost of renovation work is substantially higher post the pandemic period.
