Australia’s building approvals grow modestly in May; easier APRA regulations to lend further support

Australia’s building approvals grew modestly during the month of May, albeit remaining well below its highs. However, the easier financial regulations by the APRA and historically low cash rate will further lend support to these approvals, according to the latest report from ANZ Research.

The country’s residential building approvals grew tad 0.7 percent m/m in May, a slight reversal after the sharp declines in March and April (13.4 percent and 3.4 percent m/m respectively). Private sector unit approvals were up 1.2 percent m/m, to be down 20.1 percent y/y.

Private sector house approvals were down 0.3 percent m/m and are now down 12.7 percent y/y. More broadly, a slight pick-up in unit approvals are providing some offset to weaker house approvals.

The month of May highlighted strength in Victoria, where total approvals were up 14.4 percent m/m, driven by an impressive 40.9 percent m/m growth in the volatile unit component. Total NSW approvals were flat, representing a modest tick-up in house approvals, offset by unit weakness.

QLD and SA both saw declines in approvals (-6.3 percent m/m and 2.9 percent m/m respectively), driven by declines in unit approvals; while WA saw a total decline of 4.7 percent driven by weakness in house approvals.

NSW is leading the way on approvals, particularly in units, which have shown a sharp recovery in recent months. Meanwhile, non-residential approvals fell in May although in trend terms they look to be stabilising both in public and private terms, the report added.