Dwelling approvals fall sharply in October

By Leith van Onselen

The Australian Bureau of Statistics (ABS) has just released the Building Approvals data for the month of October. At the national level, the number of dwelling approvals fell by a seasonally adjusted -7.6% to 12,540, driven predominantly by a -18.0% decrease in approvals for private sector units and apartments. Consensus was for a total -1.8% decline.

In the year to October 2012, dwelling approvals rose by a seasonally-adjusted 14.5%. The key figures are provided in the below table:

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 were trending down since early 2010, but received a large boost in May and June when the number of unit & apartment approvals bounced. This unit and apartments surge appears short lived, however, with unit & apartment approvals again on the decline

The below chart shows the time-series of approvals at the state level.

This month’s fall in dwelling approvals was driven by Victoria, where approvals fell by -14%. Queensland (-7%) also experienced falls, whereas approvals in Western Australia (0%) and South Australia (0%)  were flat, and they rose in New South Wales (+3%).

Along with sluggish new house sales, there’s not a lot of joy in this release for Australia’s home builders, nor the construction industry more generally, which appears to be entering recession (if not there already).

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

Comments

  1. I love that state level time series.
    Now, how to best describe that humpy contour imparted by the most recent Victorian figures……

  2. So dwelling approvals up 14.5% YoY.

    Still no justification for more rate cuts without 80% max LVR’s

  3. Most states are around 1991 levels except for Victoria.

    Will be interesting to see if this is another example of the “two speed economy” where Victoria trends downwards while the other states trend sideways.

  4. Plenty of time before we need to get approvals up to keep employment up.

    The mining and resource processing boom needs all the tradies for another year yet.

    Let unemployment creep up a bit to keep a lid on costs and let demand for dwellings build, then incentivise new home construction in about end Q1 2013 in time for pre-election drop in unemployment.

    We can smooth the cycle and kick the can another few years yet.

  5. Houses were up in Victoria but apartments took a pounding.
    But then again the past few months had been crazy for apartments. Not that everything approved gets built.

  6. How’s about this.

    I saw blocks advertised on a new estate in Townsville “lake side/view” read sand fly and mozzy pit on offer for $279k

    If I was paying $279k for a postage stamp on the edge of a swamp id expect the house to come free!

    Don’t buy now and more importantly don’t buy any old shite. We live on the most sparsely populated continent on the planet so jam your sub 600m2 blocks too!

    Srsly half the land for twice the price? Get outa town girls!