Australia: June dwelling approvals down 2.9%, broad-based softness - Westpac

Matthew Hassan, Research Analyst at Westpac, notes that the Australia’s June dwelling approvals came in below expectations with a 2.9% fall following a 5.4% drop in May.

Key Quotes

“In contrast to last month’s fall, which centred on an unwinding spike in high rise approvals, the June decline was broadly based with all segments contributing.

That in turn suggests a more pronounced underlying cyclical slowdown is starting to come through.

The segment breakdown showed similar declines for private sector houses (–2.3%mth) and private ‘units’ (–2.4%mth). Within the latter, the detail points to about a 5% decline in ‘high rise’ (Westpac estimates of seasonally adjusted approvals) following a larger 15% pull back in May from n 18% jump in April. Mid-low rise approvals were down about 4%.

By state, declines in NSW and Qld were offset by gains elsewhere. Note that the sum of approvals across the state i.e. ex NT and ACT) was up slightly in the month (this may also reflect the way the data is seasonally adjusted).

Stepping back from monthly moves, trend approvals are still up slightly on a year ago in Vic, down slightly in NSW, Qld and down heavily in WA (by well over a third).

The value of renovation approvals also declined, down 3.8%mth although the value of non residential building approvals bounced 20% and is trending up at a solid 10% annual pace (monthly approvals can be very volatile).”