The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of April. At the national level, the number of dwelling approvals fell by a seasonally adjusted 5.6% to 14,931. The overall fall was driven by unit and apartments, which fell by 14.0%, with house approvals broadly unchanged (-0.3%). The result badly disappointed analysts’ expectations, who had expected a 2% lift in approvals over the month.
In the year to April 2014, dwelling approvals rose by a seasonally-adjusted 1.1%, with house approvals up by 16.5% and unit approvals down by 16.6%:
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, after trending-up strongly since late-2011, dwelling approvals nationally appear to have topped-out. While house approvals continue to improve (albeit remain lackluster overall), unit & apartment approvals are retracing from recent record highs.
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. Approvals also appear to be topping-out when measured in annual terms:
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 (-23%) and Queensland (-20%), whereas Victoria (+15%), Western Australia (+4%) and South Australia (+12%) 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 an uptrend in New South Wales and Western Australia, and a weakening up-trend in South Australia, but are range-bound and tracking sideways in Victoria, and have corrected in Queensland:
The next few month’s data will be vital as it will confirm whether the mini construction boom is prematurely running out of gas, pointing to a potential weakening of housing construction activity in 2015 just as the mining investment cliff intensifies.
