The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of January. At the national level, the number of dwelling approvals surged by a seasonally adjusted 6.8% to 17,514. The overall jump was broad-based, with house approvals also rising by 8.3% and unit approvals rising by 4.6%. The result beat analyst’s expectations, who had expected a 0.5% lift in approvals over the month.
In the year to January 2014, dwelling approvals rose by a seasonally-adjusted 34.6%, with house approvals up by 26.4% and unit approvals up by 46.3%:
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 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 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 jump in approvals was driven by Victoria (+10%), New South Wales (+5%), and Western Australia (+6%), although all jurisdictions recorded increases in approvals.
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 a more moderate uptrend also on display in South Australia. Victorian approvals, by contrast, appear to be range-bound and tracking sideways:
Overall, 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.
