August building approvals are out and month on month approvals nationally jumped 11.4% from a depressed level. Private sector housing approvals remained very subdued, falling 1% m/m and 9.5% y/y. However units approvals rocketed 35%, propelled mostly by a huge jump in NSW. There were also smaller rises in VIC and QLD but both remain in down trends:
One might surmise that the affordability issue is finally driving some sort of supply response in Sydney units. We don’t want to get too overexcited by one month’s data, but the potential irony here is, of course, that we have another housing market firing up a supply response just as the housing cycle weakens. More grist for the ‘distortions of the slow response’ argument.