The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of March. At the national level, the number of dwelling approvals fell by a seasonally adjusted 3.5% to 15,958. The overall fall was broad-based, with house approvals falling by 0.7% and unit approvals falling by 7.0%. The result disappointed analysts’ expectations, who had expected a 1.5% lift in approvals over the month.
In the year to March 2014, dwelling approvals rose by a seasonally-adjusted 20.0%, with house approvals up by 19.4% and unit approvals up by 21.6%:
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 be topping-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.
The below chart shows the time-series of approvals at the state level:
This month’s retracement in approvals was driven by Victoria (-13%), Queensland (-3%), and Western Australia (-9%), whereas New South Wales (+8%) recorded and increase and South Australia was flat.
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 and Western Australia, a weakening up-trend in Queensland and South Australia, and are range-bound and tracking sideways in Victoria:
The next few month’s data are key as it will confirm whether the mini construction boom is prematurely running out of gas, or that the recent retracement in approvals is merely a blip.
