Australia’s housing approvals rise strongly in November, but remains below 2015’s peak

Australia’s housing approvals rose strongly in November; however, it continues to be quite lower than 2015’s peak. Housing approvals grew 7 percent on a sequential basis in November, as compared with a decline of 11.8 percent seen in October. The apartment segment mainly drove the rise in residential building approvals. Growth was mainly centred in Victoria and in New South Wales, with high-density approvals improving from nine and eleven month lows, respectively, said ANZ in a research report.

But, the monthly rebound in total approvals was not sufficient to counter the declines recorded in the previous three months, and the trend continues to be downward. The high rise, high-density segment has mainly been responsible for the bulk of this falling trend, while investor finance for building new homes dropped  to the lowest level in two years in October, possibly hindered by tighter funding conditions, stated ANZ.

In spite of the positive building approvals data, the peak in dwelling construction is close and further growth is expected to be only incremental, added ANZ. Non-residential building approvals dropped a bit in November; however, it stayed around the elevated levels. The improvement seen in the second half of 2016 has widespread, with approvals for commercial offices, industrial and retail wholesale buildings accelerating.

“While much of the growth in New South Wales can be traced back to the Barangaroo development, Victoria and Queensland are also posting solid increases, which will help the eventual transition away from the housing sector”, noted ANZ.