The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of February. At the national level, the number of dwelling approvals fell by a seasonally adjusted 5.0% to 16,669. The overall fall was broad-based, with house approvals falling by 2.1% and unit approvals falling by 8.7%. The result disappointed analyst’s expectations, who had expected only a 2% fall in approvals over the month.
In the year to February 2014, dwelling approvals rose by a seasonally-adjusted 23.2%, with house approvals up by 21.8% and unit approvals up by 32.7%:
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 fairly weak overall).
In annual terms, dwelling approvals are running near record highs, 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 fairly 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 retracement in approvals was driven by New South Wales (-6%), Queensland (-16%), and South Australia (-15%), whereas Victoria (+2%) and Western Australia (+5%) recorded increases.
The same data is shown below on a 3-month moving average basis, in order to smooth volatility. As you can see, dwelling approvals remain in a strong uptrend in New South Wales, Western Australia, and Queensland (with tentative signs of weakening), with a more moderate uptrend also on display in South Australia. Victorian approvals, by contrast, appear to be range-bound and tracking sideways:
Despite this month’s retracement, trend growth in approvals continues at a solid pace, but with the less labour intensive apartments segment ahead of houses. With a bit of luck, approvals will soon manifest into actual construction and help to offset some of the upcoming decline in mining investment.
