Australian building approvals fall in August on softness in unit approvals

Australian building approvals fell 1.6 percent sequentially in August after rising 12.2 percent in the prior month. Unit approvals mainly drove the weakness, falling 12.9 percent, but house approvals continued to go up, rising 4.6 percent.

It was too soon to see the impact of the second COVID-19 wave and lockdowns in Victoria. The state’s approvals rose 1.8 percent, driven by units. Approvals came in mixed in other states and territories. Western Australia was the standout with both houses and units up strongly. Queensland also saw a strong rise in houses but unit approvals dropped 3.3 percent. New South Wales approvals fell 14.2 percent as unit approvals softened after the 63.9 percent rise in July.

Non-residential approvals rose 40.7 percent sequentially in August to their highest level since January 2020, following a volatile June and July.

“Over the remainder of 2020 and into 2021, low population growth, the weak labour market outlook and the deterioration in the rental market in some parts of the country will weigh on residential approvals. But we expect house approvals to be more resilient than unit approvals, due to HomeBuilder”, said ANZ in a research report.