Australian dwelling approvals fell by 5.7% in April, failing to rebound at the 2.8% pace expected following the 7.1% drop in March (revised from -8.8%). Downward volatility in the higher-density or unit segment has weighed on headline approvals in recent months seeing recent momentum in that series retrace. Approvals remain at low levels across all types as the RBA's tightening cycle has weighed on construction activity, while capacity in the sector has focused on working through the existing pipeline.
Headline approvals broke below the 15k level for the first time since last September as a 5.7% decline in April followed the 7.1% fall in March. Approvals actually fell for the third month running when taking February's outcome into consideration, though that particular decline was by a very minor 0.1%. For the 3 months to April, approvals averaged 15.6k, the momentum falling back to levels seen at the end of last year.
An unwinding of higher-density or unit approvals has seen headline approvals weaken over the past 3 months. Unit approvals were down 18.9% in the latest month to 5.1k following declines of 13.9% in March and 0.6% in February. As at January unit approvals (7.4k) had worked up to their highest level since December 2022. The available estimates indicate the decline has been centred in the high-rise segment in Sydney and Melbourne.
Detached or house approvals rose by 3.3% in April, posting their fastest increase in 13 months. This result lifted approvals to 9.5k, a 7-month high to be 4.3% higher across the year. However, these approvals are more than one-third below their cycle high from 2021, a peak that was boosted by pandemic stimulus after the RBA had cut rates to the lower bound and government measures supported housing construction.
