Australian building approvals sharply rise in February, driven by increase in unit approvals

Australia’s building approvals increased sharply in February, building on the small lift in January. This suggests we may be past the peak period of falling building approvals after the sharp declines in November and December.

The country’s residential building approvals rose 19.1 percent m/m in February, following a 2.3 percent increase in January. The improvement was driven by a 62.4 percent m/m increase in unit approvals (from a 3.3 percent increase in January), while house approvals fell 3.7 percent m/m (from a 1.8 percent increase). The trend in approvals remains soft, though, down 21.7 percent y/y.

New South Wales saw another rise in approvals, rising 25 percent m/m in seasonally adjusted terms, led by a 70 percent increase in unit approvals, while detached house approvals fell 15 percent. Victoria experienced a sharp increase in seasonally adjusted approvals, up 37 percent m/m, driven by a massive increase in units (134 percent), while detached house were flat (0.6 percent).

Western Australia posted a decline, down 11 percent m/m (following a 28 percent increase in December). Total approvals in Queensland rose for the first time in several months, up 3 percent m/m seasonally adjusted. South Australia fell 2 percent m/m.

The value of non-residential approvals increased 2.1 percent m/m, following the 5.5 percent increase in January. In annual terms, however, non-residential approvals were 15.7 percent lower.

"Given data volatility, it is a little early to conclude that approvals have bottomed but these data are another sign that there is still life in the Australian economy," ANZ Research commented in its latest report.