Australian dwelling approvals fell more than expected in August (-6.1%), retracing from a large rise in the prior month (11%). The volatility remains in the higher-density segment while detached approvals continued to lift posting their 7th consecutive monthly gain. Overall, higher interest rates and headwinds in the construction sector continue to weigh on dwelling approvals.
August's 5.5% fall saw national dwelling approvals come in just below 14k, down from July's total of 14.9k - the highest level since May last year. Approvals have bounced around in recent months on volatility in the higher-density (or unit) segment, the August result continuing a sequence of sharp swings: May +5.9%, June -6.3% and July +11%. Smoothing the volatility, approvals for the 3 months to August averaged 14.1k, remaining in the low range of the past couple of years as higher interest rates and capacity pressures have impacted the home building sector.
In the higher-density segment, approvals fell by 17.5% in August after a 34.6% surge in July. 3-month approvals to August averaged 4.7k, only slightly above cycle lows. Weakness continues to be most evident in high-rise units.
Detached approvals climbed to their highest level in almost 2 years (9.5k) on the back of a further 0.6% rise in August, the 7th consecutive increase to be up 8.1% across the past 12 months. However, approvals in August are still down by a little more than a third on their earlier cycle peak in 2021.
Alteration approvals - in value terms - continue to trend higher rising 1.4% to $1.1bn in August. Higher construction costs and robust demand have seen these approvals increase by almost 10% over the past year.
