Australia building approvals rise in September, offsetting previous losses; likely to continue trending lower in near term: ANZ Research

Australia’s housing approvals recovered somewhat in September, following large declines in the prior two months. The improvement was concentrated in apartment approvals, which rose a sharp 10.7 percent m/m, partially offsetting the large declines in recent months.

Australian building approvals rose 3.3 percent m/m in September, following a revised 8.1 percent decline in August (originally printed as -9.4 percent m/m). Total residential approvals are now 14.1 percent lower than a year ago, with both houses (-7.1 percent y/y) and apartments (-21.4 percent) suffering.

Across the states, Victoria saw a large increase (30.5 percent m/m), due to a 109.1 percent increase in apartment approvals. Despite the strong improvement, Victorian approvals remain on a downward trend. South Australia also stood out with housing approvals increasing 7.8 percent m/m – led by a 57.2 percent increase in apartment approvals.

QLD and WA both saw sharp declines in housing approvals (10.5 percent and 19 percent m/m, respectively). NSW approvals declined 6.8 percent, as the 20.3 percent decline in apartment approvals offset the improvement in approvals for houses, which increased 10.9 percent, the largest increase since February 2017.

Non-residential approvals fell 4 percent, following the sharp, offsetting moves in July and August. This series is particularly volatile, but is trending lower after a strong 2017.

"We expect approvals to continue trending lower in the near term, given that the tighter credit conditions facing developers and new home purchasers are likely to continue," the report commented.