Australian dwelling approvals August 2016: Westpac's Matthew Hassan
GUEST OBSERVER
Dwelling approvals outstripped expectations again in August, with a small 1.8 percent pull back from a big spike in July (+12 percent revised up slightly from +11.3 percent).
The consensus forecast was for a more material 6 percent fall. The July update was the second highest level of approvals on record. The August pull back still leaves approvals at the fourth highest level on record.
Expectations centred on high rise approvals which drove the July gain and which tend to be volatile due to large projects. This segment instead held up better than expected with our estimates pointing to about a 10 percent drop in seasonally adjusted terms that still left high rise approvals about 25 percent above their June level.
The rest of the detail showed a decent rise in ‘low-mid rise’ approvals, we estimate up about 7-8 percent in the month with the more stable detached house approvals segment down 1.3 percent/mth. Combine approvals ex high rise were up slightly, we estimate up 1.2 percent/mth. To the extent that this measure is more reflective of underlying trends it is pointing to a modest decline running at about 1-1.5 percent a month.
By state, approvals dipped 2.3 percent in NSW but were up slightly in Vic and Qld with big monthly declines coming in WA and SA. Notably, within the NSW estimates ‘unit’ approvals were still the second highest monthly level on record.
The value of renovation approvals also softened in Aug, down 0.9 percent. The value of non res building approvals recorded a bigger decline down 24 percent/mth and 13 percent/yr.
Overall, the continued high level of approvals points to a dwelling construction holding up stronger for longer although a softening is still expected to come through in coming months.
Details
Private houses –1.3%mth, –6.5%yr
Private 'units' –3.6%mth, 26.3%yr
NSW –2.3%mth, 37%yr
Vic 1.8%mth, 14.7%yr
Qld 0.6%mth, 13.5%yr
WA –14.3%mth, –36.5%yr
SA –10.6%mth, –22.6%yr
Alteration & additions^ –0.9%mth, 1.2%yr
Non-residential^ –24.3%mth, –12.9%yr
^ value
Matthew Hassan is senior economist with Westpac.
