Australian dwelling approvals fell by 6.4% for the month in October (15.8k), slightly worse than the expected decline of 5%. The result reversed some of the 11.1% rise in September (revised from 12%), the only gain in approvals in the past 4 months. Approvals remain at low levels despite supportive macro factors.
Approvals nationally declined by 6.4% to 15.8k in October, down 1.8% on a year earlier. This, however, followed a large rise in the previous month of 11.1%. In October, both major dwelling types recorded declines: house approvals fell 2% to 9.4k (following a 4% rise in September), and unit approvals inverted 12.1% to 6.1k (after surging 22.2% in the prior month).
Over the past 3 months, dwelling approvals averaged around 16k, with house approvals running at 9.4k and units at 6.6k - all low levels relative to previous cycles. The RBA's earlier tightening cycle as well as capacity and cost pressures have been headwinds; however, there are also fundamentals that should be supporting additional housing construction, including RBA rate cuts, rising housing prices and population growth.
House approvals were weighed by weakness in New South Wales (-0.2%), Victoria (-7.8%), and South Australia (-2.3%). Gains came through in Queensland (1.7%) and Western Australia (2%).
In the unit segment, a reversal in the volatile high-rise category drove the decline in approvals in October. That was despite the low-rise and townhouse categories seeing some uplift. Unit approvals declined heavily in New South Wales, Victoria and Queensland.
