Australian residential building approvals fall 1.1 pct m/m in August, following a 9.7 pct drop in July

Australian residential building approvals fell 1.1 percent m/m in August, following a 9.7 percent drop in July. Apartment approvals rose only a modest 1.5 percent, after the 19.7 percent slump in July, while house approvals fell 2.6 percent. Approvals are now running 21.5 percent lower than a year ago, ANZ Research reported.

Looking at the states, the weakness was concentrated in Queensland where approvals fell 21 percent, driven by a 48 percent collapse in apartment approvals. SA approvals were also weak, dropping a sharp 28 percent (although this follows a 32 percent rise in July).

NSW and Victoria saw solid rises of 10.6 percent and 6.5 percent respectively, with the strength concentrated in apartment approvals. In WA, approvals rose 4.2 percent, building on the 9.0 percent in July.

The value of non-residential approvals rose sharply in August (+54 percent), driven largely by strength in public approvals, which jumped AUD1.6 billion. Private sector approvals also rose strongly and the trend is now firmly higher suggesting a near-term pick-up in non-residential construction.

The ongoing weakness in housing approvals points to further falls in residential construction over coming months. September should see a bounce given reports of some large apartment block approvals in Sydney, but the pipeline of activity elsewhere is diminishing.

"We do expect to see a broad-based improvement in approvals in coming months, but given the falls to date, construction is likely to remain weak for some time," the report further commented.