Commencements of 195k in 2017 & 175k in 2018 Q1-17 dwelling commencements fell more than expected, down 11% q/q & 19% y/y, the ~largest fall since the GFC, to 202k a.r., the lowest since Q2-14 (albeit likely partly weather related). Q1 was hit by a slump of private medium-density (-15% q/q, -29% y/y), but private houses also fell (-8% q/q, -9% y/y, Figure 2).
More recent approvals also surprisingly dropped 20% y/y to 197k a.r. in May-17, the ~lowest since 2014, well below a ~240k trend in recent years (Figure 3). Highrises of 4+storeys are the key drag (Figure 4). Indeed, amid anecdotes of developer caution and tighter lending/credit conditions (and some capacity constraints given a ~record level of activity), the approvals-to-commencements ratio retraced sharply to well below a ‘break-even’ level (i.e. 1) and also under its average (Figure 5).
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
