The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of October. At the national level, the number of dwelling approvals fell by a seasonally adjusted 1.8% to 16,491. The overall fall was driven by a decline in the volatile unit & apartments segment, which fell by 2.7% over the month. House approvals also fell but by a more moderate 0.3%. The result beat analyst’s expectations, who had expected a total fall in approvals of 5% over the month.
In the year to October 2013, dwelling approvals rose by a seasonally-adjusted 23.1%, again driven by a big lift in unit & apartment approvals (+47.7%), whereas house approvals rose by 9.6%:
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, 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 fall in approvals was driven by New South Wales, where approvals fell by 33% over the month on the back of falling units & apartments (down 47%). The decline in New South Wales was partly offset by surging approvals in Victoria (up 23% on unit & apartments) and Queensland (up 10% also on units & apartments).
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 a moderate uptrend in Queensland and South Australia. Victorian approvals remain in a medium-term downtrend, but look like they could be reversing as the recent changes to the first home buyers grant favouring pre-existing dwellings bites:
Overall, despite this month’s slide, 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.
