Approvals Dip Masks Solid Construction Pipeline
The dwelling construction pipeline remains solid, especially for private homes.
That’s despite what looks like a nasty 5% drop (seasonally adjusted) in total home building approvals in April.
That was worse than the 3.0% fall the market was expecting but once again the broad figures didn’t tell the whole story which is nowhere near as gloomy as the 5% fall suggests.
In fact the figures were better than they looked with the fall due to another month of weaker than expected approvals for apartments, home units etc which slumped 11.5% to 8,083, to be down 7.5% over the year (seasonally adjusted). They were up 6% in March.
Approvals for new private homes rose 0.1% to be up a very solid 11% over the past year and pointing to a solid year for the private dwelling construction sector.
Over the 12 months to January, building approvals are still up 1.9 per cent, the Australian Bureau of Statistics (ABS) figures showed. Apartments are the ‘swing’ factor each month, rising or falling as local government bodies bunch or string out approvals.
According to the ABS approvals fell 5% to 18,701 in seasonally adjusted terms. Private house approvals reached 10,446 for the month.
In dollar terms, the value of total building approved fell 4.2% after seasonal adjustments. Both residential and non-residential were weaker, falling 4.3% and 4.0% respectively.
Based on the trend figures released for April, there are few signs that weaker home prices in Sydney and Melbourne are leading to a reduction in approvals.
They were nearly unchanged at 19,038 last month, up 5.7% on 12 months earlier.
On a trend basis, approvals for private sector houses and other dwellings both increased over the year, lifting by 9.4% and 2% respectively to 10,412 and 8,447.
Among the states and territories, dwelling approvals fell in April in Tasmania (3.7%), Victoria (2.3%) and WA (2.2%) in trend terms, according to the ABS data.
Dwelling approvals rose in trend terms in the ACT (14.8%), the Northern Territory (6.7%), South Australia (1.7%), NSW (0.9%) and Queensland (0.7%).
In trend terms, approvals for private sector houses rose 0.9% in April. Private sector house approvals rose in Queensland (by 1.6%), Victoria (1.5%) and NSW (0.6%), but fell in WA (0.9%) and South Australia (0.4%).
Approvals for commercial properties such as offices slipped for a second straight month in April, down 4%. They are down nearly 20% in the last 12 months which will please the Reserve Bank in that commercial property is where any problems in property first appear for the banks.
“The recent downturn in approvals is challenging our outlook for ongoing strength in non-residential activity into 2019,” ANZ economists said in a note.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.