Australian dwelling approvals lifted by 1.9% in March, their first rise since November last year but coming in short of expectations for a 3% increase. Ongoing headwinds in the home building sector due to factors such as higher interest rates, capacity pressures amid a sizeable housing pipeline and weak sentiment associated with increased insolvencies drove quarterly approvals to a 12-year low.
Dwelling approvals increased by 1.9% in March (12.9k), stemming a run of three consecutive month-on-month declines. However, that increase underwhelmed expectations for a 3% lift, and approvals still contracted by a sizeable 9% over the first quarter to 38.5k. This was the lowest quarterly figure for approvals in 12 years. Even though house approvals lifted by 3.6% in March following a 12.2% gain in February, the segment was still saw a 3.4% decline in Q1 to 25.4k. Meanwhile, unit approvals were down 1.8% in the latest month contracting by 18.2% overall in Q1 to 13.1k, a low back to Q1 2012.
Detached house approvals across the capital cities remain very low. House approvals in Q1 in several cities were around the lows seen at the outset of the pandemic.
The value of residential alterations approved remains high and was little changed through Q1 (-0.2%) at $3.1bn. By contrast, non-residential approvals (including office, retail and industrial buildings) extended their decline from the back half of last year falling by a further 6.9% in the first quarter ($14.3bn).
Despite rising in March, dwelling approvals showed further weakness over the first quarter of the year as a range of headwinds continue to impact the home building sector. Builders have been focused on working through the sizeable number of homes under construction that accumulated during the pandemic period, with the low level of approvals indicative of a reluctance or inability to add much further to the pipeline, despite population growth running at a well above average pace.
