Australia August residential building approvals fall sharply; likely to trend lower on tighter credit conditions

Australia’s residential building approvals are expected to continue to trend lower in the near term given the tighter credit conditions facing both developers and would-be new home purchasers, according to the latest report from ANZ Research.

Further, building approvals fell a sharp 9.4 percent in August, following a weak result in July (-4.6 percent m/m). Total residential approvals are down close to 14 percent y/y, with units approvals (-24 percent) seemingly more affected by tighter credit conditions than house approvals which have fallen a much more modest 4 percent.

Across the states, ACT saw a very sharp fall (-65 percent) as a jump in unit approvals in July was reversed, while Victoria was also very weak with a 35 percent m/m drop in unit approvals. Unit approvals in Victoria are now down a sharp 46 percent y/y. Approvals were also weak in Queensland, while WA saw a solid rise.

Meanwhile, non-residential approvals fell a sharp (-24 percent m/m), following the 31 percent jump in July. This series is particularly volatile, but is trending lower after a very strong 2017.