Australia’s housing approvals fall in December, construction activity to remain elevated in 2017

Australia’s housing approvals dropped in December and stayed quite below the recent peaks. Total approvals dropped 1.2 percent sequentially in December after rising 7.5 percent in the prior month. Market projections were for the approvals to fall 1.5 percent. Building approvals across the capital cities came in mixed. Movements in the units/apartments segment witnessed total approvals in New South Wales dropping 13 percent sequentially to the lowest level in two years. Meanwhile, approvals in Victoria grew further by 17 percent.

In all, there is rising evidence that approvals are beginning to trend around lower levels. In the last three months, 51,000 dwellings have been approved. This is down from the 60,000 per quarter sustained through the mid-2016. Most of the deceleration is because of the high density, high rise apartment segment.

The volume of supply set to come on stream in the next 12 to 18 months seems to be a drag on the new approvals, noted ANZ. This view is underpinned by the deceleration in investor borrowing approvals for housing construction, in spite of overall investor finance accelerating. Total building approvals have been trending lower since mid-2015. But the considerable backlog of work signifies that construction activity would stay elevated through 2017, added ANZ.