Multi-units drive approvals lower
FOLLOWING two consecutive months of increase, total new dwelling approvals declined during May as a result of weakness on the multi-unit dwelling side of the market.
Compared with April, total new dwelling approvals fell by 5.2 per cent in seasonally-adjusted terms.
This involved a decline of 10.3% in multi-unit approvals, with detached house approvals inching up by 0.2% over the same period.
“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,” said HIA senior economist Shane Garrett.
“Interestingly, the RBA cut interest rates during May and (this) result indicate that this move may have helped contribute to steadier conditions for detached house approvals,” he said. “The decline in approvals during May was quite widespread in geographic terms, with Victoria being the only major state to experience an increase during the month.”
Mr Garrett said the figures fitted closely with HIA’s view that new home building activity was in the process of declining from last year’s record peak to more modest levels as the end of this decade fast approaches.
“The contraction in activity is predicted to be concentrated on the multi-unit side, with a more measured reduction in detached house building,” he said.
During May 2016, total seasonally adjusted new home building approvals rose in Victoria (+3.1%) with a slight increase also occurring in Tasmania (+0.1%).
New dwelling approvals saw the largest reductions in Western Australia (-20%), Queensland (-17.6%) and South Australia (-13%) with a fall also occurring in New South Wales (-6.9%).