In stark contrast to the strong July retail sales, building approvals last month slumped 17.2% as the bloom faded almost completely from the apartments, home units and flats sector.
While retail sales rose a solid 1.3% in July from June it was a very different story for building approvals, although it must be said, for non-private dwelling approvals in particular.
Private dwelling approvals were up for a second successive month, belying the recent hike in interest rates, especially for home loans.
Data from the Australian Bureau of Statistics (ABS) on Tuesday revealed approvals for non-private dwellings slumped a massive 43.5% in July from June to be down 43% in the year.
The same data though confirmed the slump was focused solely in that sector – private dwelling approvals rose 0.7% in July but were still down 26% in the past year.
That sets up a very weak start to calendar 2023 for the home building and construction sector and it is no wonder there have been a growing number of building companies failing and reports of rising job losses.
The total number of approvals in July was actually a 10 year low.
July’s overall slide followed a much smaller 0.6% dip in approvals in June.
Higher interest rates were blamed on the fall in non-private dwellings, but then private dwelling approvals were up 1.6% in June and now again in July, so the lift in home loan rates in the wake of the Reserve Bank hiking the cash rates, doesn’t hold up as a real explanation.
And that resilience in private dwelling approvals and finance will not make the Reserve Bank happy, even though the pace of approvals and finance have fallen sharply in the past few months.
The value of total building approved fell 12.9% in July, after June’s 6.2% drop.
Total approvals in July of 13,595 were 42% lower than the most recent peak of 23,595 in March, 2021.
The value of total residential building fell 6.1%, comprising of a 6.9% decline in new residential building and a 1.3% in alterations and additions which continue to hold up rather strongly.
As well the ABS said the value of non-residential building fell 22.6%, driven by falls in both private and public sector approvals in July.
Daniel Rossi, head of construction statistics at the ABS, said: “the decrease in the total number of dwellings approved in July was led by a sharp decline in approvals for private sector dwellings excluding houses, which dropped by 43.5 per cent.”
“This was the lowest level recorded since January 2012 and was driven by a lack of approvals for large apartment developments.”
Western Australia saw the largest fall in the number of dwelling approvals in July – 36.9%; followed by Victoria with a 17.4% drop. NSW with a 16.2% slump, Tasmania, 14.5% and Queensland with a 13.7% slide.
Dwelling approvals in South Australia went against the trend, rising 19.2% in July 19.2, in seasonally adjusted terms.
Only two states recorded a decline in approvals for private sector houses, Western Australia (-8.7%) and NSW (a fall of 6.3%). In contrast, approvals for private sector houses rose in South Australia (up 18.6%), Queensland (5.8%) and Victoria (1.5%).
