Australian building approvals rise strongly in November, likely to trend higher in near to medium term

Australian building approvals saw quite a robust growth in November, driven by Victoria’s high-rise apartment sector. This volatile series is expected to unwind slightly in next month’s data; however, building approvals are likely to trend slightly higher going forward, noted ANZ in a research report. New dwelling approvals grew 12 percent sequentially in November. Approvals for detached houses dropped; however, the unit/apartment segment saw very strong growth.

Victoria recorded a surge in apartment approvals. Following a rise of 40 percent in the prior month, November recorded a further rise of 80 percent on a sequential basis. This is a new record level in the process. Within the wide apartment/unit segment, lower-density, townhouse developments have been the main driver of growth in Victoria in recent months; however, November witnessed the high-rise sector rising to life.

Meanwhile, housing approvals dropped in New South Wales, but continued to be elevated. Approvals also dropped about 2 percent in Queensland, bumping around the lowest levels in around three years in that state.

This solid overall result is expected to unwind next month, as Victoria might not sustain such levels of activity, stated ANZ. However, the leading indicators such as finance for the construction or purchase of new housing continue to indicate toward additional rises in approvals.

“We therefore expect approvals will continue to trend higher over the near to medium term, albeit with volatility from month to month. It seems pretty clear to us that any fears of weaker dwelling construction in 2018 are misplaced”, added ANZ.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was highly bearish at -81.7571, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 21.604. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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