Australia: Dwelling approvals holding at high levels - Westpac

Matthew Hassan, Research Analyst at Westpac, points out that Australian dwelling approvals were a touch firmer than expected in March, rising 2.6% in the month vs consensus forecast of a 1% gain.

Key Quotes

“Approvals are up 14.5%yr although the gain is exaggerated by monthly volatility affecting the base period. For Q1 as a whole, approvals are up 2.1%qtr and 8.5%yr.”

“For the March month, the headline gain was led by a strong rebound in +6.1%mth and a reasonably solid 1.1%mth gain for private detached houses. For Q1 as a whole, units were up 1.8%qtr and houses up 2.4%qtr. Within the 'units' segment 'high rise' rebounded over 20% in the March month but were still down 6.9%qtr. 'Low rise' approvals rose 4.9%qtr.”

“On a combined basis, 'non-high rise' approvals were down 0.9%mth but up 3%qtr. This is a little firmer than expected with construction-related finance approvals pointing to more of a softening. For Q1 as a whole, Non high rise approvals are up 4.8%yr.”

“Overall, the state detail looks to be broadly consistent with an expected pull-back in high rise approvals concentrated in NSW and Qld with Vic expected to hold up better.
The value of renovation approvals fell 6.3% in the month, down 4.5%qtr for Q1 as a whole with a slight downtrend now in place.”

“Overall, despite the stronger than expected read on dwelling approvals this month the state mix on high rise activity remains consistent with lead indicators pointing to another leg lower led by NSW and Qld. Meanwhile construction-related finance approvals continue to point to a further softening to come for non-high rise segments.”