Australian building approvals falls sharply in November, housing construction to slowdown sharply in 2019

Australian building approvals unexpectedly dropped sharply in November. On a year-on-year basis, approvals dropped 33 percent. Sequentially, residential building approvals dropped 9.1 percent in the month. The year-on-year fall is the biggest annual fall since the year to January 2009. House approvals dropped 2.3 percent sequentially, to be 6.5 percent lower over the year. Approvals for units dropped 18.4 percent sequentially, to be more than 50 percent below over the year. In trend terms, approvals fell 18.3 percent year-on-year, the softest result since December 2011.

Unit approvals fell sharply in New South Wales and Victoria, falling 14.5 percent and 25.8 percent, respectively. Victorian unit approvals fell 70 percent from last November. Unit approvals were also strong in Victoria in September and October, and when taken three months together, unit approvals rose 1 percent in the three months to August. Reflecting the strength in the earlier months the trend of unit approvals for Victoria rose 0.7 percent sequentially in November, noted ANZ in a research report.

Meanwhile, the value of non-residential approvals were up 11.1 percent sequentially to be down 8.6 percent year-on-year. The rise in the value of non-residential approvals in November has stalled the accelerating year-on-year fall.

“The weakness in the data will intensify concerns that a severe slowing in housing construction will hit the economy in 2019, even though the backlog of housing construction is high and the non-residential sector is robust. Our forecasts already incorporate a decent slowing in residential construction in 2019”, added ANZ.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was slightly bullish at 65.0558, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -60.9137. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex