Australia’s building approvals continue to trend lower in October, in line with market estimates

Australia’s building approvals in both residential and non-residential segments continued to trend lower during the month of October, in line with what markets had anticipated as credit conditions still weigh on.

The country’s residential building approvals fell 1.5 percent m/m in October, in line with market expectations, following an upwardly revised 5.5 percent gain the previous month. Approvals for houses rose (+1.7 percent m/m), the first rise since June, but are still 4.9 percent lower over the year.

Further, approvals for units fell by 5.4 percent m/m, to be 22.6 percent lower over the year. In trend terms, approvals are down 13.9 percent y/y. Across the states, unit approvals rose in New South Wales (+5.1 percent m/m) for the first time since June, while approvals for houses fell by 5.9 percent m/m after the 12.2 percent jump in September.

In Victoria, approvals for houses jumped 7.3 percent m/m while unit approvals fell just 13.4 percent m/m after the 110.9 percent m/m jump the previous month. For Queensland, total approvals fell 1.1 percent, while South Australia recorded a sharp fall (of 17 percent m/m) and approvals in West Australia were up 0.8 percent m/m.

"We have factored further declines in building approvals into our forecasts, although the solid pipeline of work will support the level of residential construction at elevated levels for some time," ANZ Research commented in its latest report.