The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of September. At the national level, the number of dwelling approvals rose by a seasonally adjusted 14.4% to 16,318. The overall rise was driven by a large increase in the volatile unit & apartments segment, which surged by 31.8% over the month. House approvals also rose but by a more moderate 1.5% Consensus was for a total rise in approvals of 2.8% over the month.
In the year to September 2013, dwelling approvals rose by a seasonally-adjusted 18.6%, again driven by a big lift in unit & apartment approvals (+31.9%), whereas house approvals rose by 7.7%:
A chart showing the time series of seasonally-adjusted dwelling approvals at the national level is provided below, split-out by detached houses and units & apartments:
As you can see, dwelling approvals nationally continue to trend up after bottoming in late-2011. This recovery has been driven by a pick-up in both unit & apartment approvals (although they remain volatile) and house approvals (although they remain weak overall).
In annual terms, dwelling approvals are running above their long-term average levels, as shown by the below chart, with weakness in detached house approvals more than offset by strength in unit & apartment approvals. However, as noted previously, approvals remain highly depressed overall in population-adjusted terms, given that Australia’s population has grown by around 45% over the past 30-years.
The below chart shows the time-series of approvals at the state level:
This month’s increase in approvals was driven primarily by New South Wales and Victoria, where approvals rose by 18% and 25% respectively over the month on the back of surging units & apartments (up 43% and 40% respectively).
The same data is shown below on a 3-month moving average basis, in order to smooth volatility. As you can see, dwelling approvals are in a strong uptrend in New South Wales and Western Australia, and a moderate uptrend in Queensland and South Australia. Victorian approvals remain in a downtrend, but look like they could be reversing as the recent changes to the first home buyers grant favouring pre-existing dwellings bites. Note also that approvals in New South Wales have overtaken Victoria’s for the first time in around a decade.
So, the recovery in approvals and construction continues at decent pace, but with the less labour intensive apartments segment far ahead of houses and huge doubts remaining over whether the RBA’s plan for housing to fill the void left as the mining boom unwinds will be fulfilled.
