Building Approvals - Extending a Downward Trend

• Building approvals fell 3.2% in May, the second consecutive monthly fall after a 5.6% drop in April. The fall over May was worse than markets had anticipated. However, further weakness in building approvals is not too surprising given the slowdown in house prices and lending. It was only a matter of time before weaker housing conditions extended to building activity.
• Approvals are now 17.7% down from their August 2016 peak, although they are 3.1% higher than a year ago. Approvals have remained at above average levels, but are likely to weaken further as housing conditions continue to soften.
• Unusually, it was approvals of private sector houses drove the decline. In May, private sector house approvals fell 8.6% in May. Private sector “other” dwellings, which includes apartments and tends to be the more volatile category, rose 4.3% in May.
• Queensland led the decline in approvals in May (-26.7%). Among other States and territories, there was weakness in NSW (-1.2%) and Western Australia (-0.6%). Approvals increased modestly in Victoria (0.3%) and Tasmania (1.8%). Meanwhile, South Australian building approvals jumped 35.9%.
• A downward trend in approvals is extending. A number of indicators on housing, including house prices, auction clearance rates and lending are pointing to further weakness in housing conditions, and suggest weakness in approvals and residential construction over coming months.

 

Please see the attached report for more information.

Download.pdf Back to News