Australia residential building approvals drop again in June

Data released by the Australian Bureau of Statistics earlier on Tuesday showed that Australia's building approvals declined 2.9 percent in June, following a 5.4 percent decrease in the previous month. Two consecutive months of fall is rare, last observed in early 2014. Data suggested that Australia’s residential construction boom is now past its peak.

On a year-on-year basis, approvals also fell short of expectations, dropping 5.9 percent instead of the 2.4 percent fall anticipated. The 9.1 percent fall in May was also revised to 9.2 percent. The weakness was also broad-based, with approvals for both houses and dwellings excluding houses (apartments) down during the month.

Despite fall in residential building approvals in June, the number of building approvals remains at a high level and suggest that construction will continue to support GDP. Over the past year, including both, private and public sectors, total dwelling approvals numbered 233,246, compared to the record level of 241,016 approved in the 12 months to October 2015.

"We expect that further increases in house prices and low interest rates will continue to support housing activity. However, the positive impact of housing construction on economic growth will likely weaken over the coming 6 to 18 months," said St. George Bank in a report.