New data from the Australian Bureau of Statistics (ABS) shows that dwelling approvals fell by 12.9% in October and were down 8.1% year-on-year.
The fall was driven by unit approvals, which tanked 37.5%. This was partly offset by house approvals, which rose 4.3%.
Over the year, houses approvals fell 3.7% whereas unit approvals fell 16.5%.
The next chart, which presents the data in seasonally adjusted terms, plots the changes:
According to Daniel Rossi, Director of Construction Statistics at the ABS:
“The decline in the total number of dwellings approved in October was driven by a large fall in approvals for private sector dwellings excluding houses, which fell 37.5 per cent.
“Private sector houses stabilised, up 4.3 per cent in October, following a 14.8 per cent fall in September. The series has been at historically elevated levels over the past year, largely driven by Government stimulus and record low interest rates. The October result remains 34.3 per cent higher than the pre-pandemic level in October 2019, despite slowing in recent months.”
Annual dwelling approvals have finally begun to fall. Detached house approvals have recently peaked at record levels, whereas apartment approvals have rebounded from their recent weakness:
The next chart plots annual approvals across the major jurisdictions, which shows that all markets have rebounded from recent lows, although all are topping out:
Based on this data, dwelling construction should remain strong for the next several quarters given approvals lead commencements and completions.
The big slowdown should arrive late next year after the huge number of homes currently under construction are completed.