Analysts calls the 15.3 per cent slump ‘a mere fluctuation’

BUILDING approvals have fallen to the lowest monthly total in more than six years as consents for units and townhouses in Victoria plummeted.

A 15.3 per cent seasonally adjusted monthly fall in dwelling approvals in January meant 1700 fewer homes were given the go-ahead compared with December.

The 13,016 approvals was the lowest monthly total since 2013, according to AMP’s Shane Oliver. Unit and townhouse approvals were down by 35.5 per cent.

This was particularly evident in Victoria, where there had been a surge in units.

ANZ said Victorian unit approvals alone were down 68 per cent month on month, the biggest fall since 2005.

Contrasting this, New South Wales and Queensland unit approvals both increased in January.

Houses were a different story – with total approvals edging 0.3 per cent higher for the month.

Analysts expected a flat overall result for total dwellings – about a 1 per cent gain – though some noted potential volatility on account of summer bushfire disruptions.

The first increase in about 18 months, on an annual basis, was recorded in the figures for December.

Analysts may now disregard that result as a mere fluctuation. Westpac senior economist Matthew Hassan said big swings in results like the 15.3 per cent drop were particularly common in January.

Housing activity is usually subdued in January and figures can be more susceptible to fluctuations.

BIS Oxford Economics economist Maree Kilroy said the slump in units in Victoria was the driving force behind the weaker national result.

She expected the housing market to rebound and the government’s first homebuyer scheme to boost results in the months ahead.

Coronavirus impact would likely be seen in the second half of the year, she said.