Australian dwelling dwelling approvals rose 4.2% to a 22-month high of 15.5k in October, well clear of the 1.5% lift expected. Approvals were coming off a 5.8% increase in September (revised up from 4.4%) and have advanced in 7 of the past 9 months. Unit approvals (22.4%) spiked to drive the headline increase in October. The uptrend in detached house approvals was snapped by a 5% decline in October, pulling back after reaching a 25-month high in September. Higher interest rates and capacity pressures persist, but the intensity of those headwinds impacting the home building sector may be easing.
A 4.2% month-on-month rise saw headline dwelling approvals pressing 2-year highs in October. Volatility in unit approvals was positive in the month (22.4%), more than offsetting a fall in detached approvals (-5.0%) - just the 3rd month-on-month decline for the segment since the start of the year. 3-month approvals have risen to average 14.8k - their highest since early 2023 to be up from 13.1k at the lows for the cycle in March 2023. Detached approvals averaged 9.6k over the past 3 months, a high back to late 2022, while unit approvals remained at a low level averaging around 5.3k.
The underlying detail in the report showed a sharp increase in high-rise approvals in October, largely coming through in Sydney and Melbourne. Townhouse and low-rise approvals also contributed to the strength in the higher-density segment.
The value of alteration work approved remains elevated ($1.1bn) despite declining by 4.2% in October. Although the volume of alteration work has slowed from the peaks seen during the pandemic, the value of alterations has remained high, which reflects the pass-through of cost pressures faced by the sector.
