Australian dwelling approvals lifted to a 14-month high (14.8k) on the back of a 10.4% rise in July, well north of the 2.8% increase expected. The July result was driven by a surge in higher-density approvals (33.7%), with the detached segment up only modestly (0.3%) but rising for the 6th month in succession.
National dwelling approvals rebounded from a 6.4% fall in June to rise by 10.4% in July, coming in at 14.8k in the month - their highest level since May last year. However, July's total was still down more than 35% on the cycle peak in March 2021 as higher interest rates, elevated construction costs, trade shortages and rising insolvencies continue to weigh on home building activity.
Although only edging up by 0.3% in July, detached house approvals (9.4k) lifted to their highest level since October 2022. Over the past year, approvals in this segment have risen by almost 13%, with many states contributing to the uplift: Western Australia 54.8%, South Australia 22.3%, Queensland 18.9% and Victoria 10.3%. By contrast, approvals in New South Wales have declined on 12 months ago (-7.0%).
Higher-density approvals on a seasonally adjusted basis posted their largest one-month rise (33.7%) since May 2023, with July's total of 5.4k being the highest in 8 months. The underlying detail in today's release (not seasonally adjusted) indicated that it was the low-rise segment (1-3 storeys) that drove that acceleration in higher-density approvals, with townhouses also contributing. On today's numbers, high-rise approvals contracted sharply in July and over the past year.
Alteration approvals -relating to renovation work on existing homes - declined by nearly 7% in July, but the value of work approved remained elevated at above $1.1bn. Higher construction costs have been a factor in keeping alteration approvals elevated, but there also appears to be a demand component to this; last week's construction activity data showed alteration activity lifted in Q2 and more details will come to hand in the National Accounts on Wednesday. High housing prices may be encouraging many homeowners to renovate rather than upgrade.
