There is a strong hint from the April building approvals data that the sharp fall seen in recent months, especially in non-house dwellings, could be steadying.
The data is clouded by the usual month to month volatility of the seasonal adjusted figures, so the more accurate trend figures suggest that the fall in approvals is not as bad as it seemed at month ago.
That will give some comfort to the Reserve Bank which is worried that the strength in dwelling investment might be weakening faster than previous thought, and with weak wages, might increase pressure for a rate cut.
The RBA is also watching housing prices closely, especially in Sydney and Melbourne and early data for May from Corelogic suggests prices in the five major capital cities fell 1.1% in May. The full data will be released on Friday.
The March seasonally adjusted data suggested a 13.4% slide because of a big drop in approvals for non-private dwellings, such as apartments.
But that was revised to a fall of 10.3% in the April report and the actual seasonally adjusted figure for April saw a rise of 4.4% thanks to a small rise in private housing approvals and a 9.6% jump in non-private housing (or ‘other dwellings).
On a trend basis, total approvals rose 0.1% in April, with a 0.2% drop in private housing approvals and a rise of 0.5% in other dwelling approvals.
Total approvals in trend terms, have now risen for three months according to the Australian Bureau of Statistics (ABS) in yesterday’s statement. That was after falling for 8 months.
“Dwelling approvals have been relatively stable in trend terms over the past three months, after falling from record highs in mid-2016,” said the ABS said. “The April 2017 data showed that the number of dwellings approved is now 14 per cent below the peak in May 2016”.
Private housing approvals are down 8% in the past year and other dwellings 19%.
As usual it has been the bunched nature of approvals by local government bodies that have given us the volatility in the other dwelling category, as well as the size of the projects being approved.
The weakness in the apartments category (down 33% from may, 2016), had stoked fears that the residential boom was slowing at a faster-than-expected pace, but economists said the trajectory now seems less alarming.
"The detail suggests weather disruptions contributed to the choppy pattern over March-April, although the broader picture of a high-rise driven slowdown remains intact," Westpac economist Matthew Hassan said.
On annual basis, seasonally adjusted building approvals are down 17.2% over the 12 months to April. On a trend basis total approvals have been steady around 17,500 a month for the past five months, with other dwelling approvals around 8,000 to 8,300 for the same five months. But private swelling approvals have dipped from more than 9,500 last November to 9,283 in April.
