Apartment weakness drives decline in dwelling approvals
A declining apartment market has seen dwelling approvals fall in May following two consecutive months of increases.
New dwelling approvals fell 5.2% in May, driven by a 10.3% decline in multi-unit approvals. The fall in apartment approvals erased the effect of a modest 0.2% rise in detached house approvals, and followed on increases in March and April.
HIA senior economist Shane Garrett said the result revealed a trend in the apartment market.
“Multi-unit approvals tend to bounce around a lot from one month to the next, but it’s been clear for some time that activity on this side of the market has peaked,” Garrett said.
Garrett said, however, that the RBA’s May rate cut may have contributed to steadier conditions for detached housing figures.
The decline in approvals for the month was widespread, with only Victoria and Tasmania posting rises of 3.1% and 0.1%, respectively. Western Australia saw the largest decline in approvals at 20%, followed by Queensland at 17.6%, South Australia at 13% and New South Wales at 6.9%.
“Today’s figures fit closely with our view that new home building activity is in the process of declining from last year’s record peak to more modest levels as the end of the decade approaches. The contraction in activity is predicted to be concentrated on the multi-unit side, with a more measured reduction in detached house building,” Garrett said.