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The number of Australian home building permits fell by 5 per cent in April from March, led by a sharp drop in in apartment approvals.
The market was expecting a 3 per cent fall in new home building permit approvals.
Total building approvals fell to 18,701 in seasonally adjusted terms from 19,693 in March, the latest Australian Bureau of Statistics figures show.
Approvals for private sector houses were up 0.1 per cent in the month, while the “other dwellings” category, which includes apartment blocks and townhouses, fell 11.5 per cent.
Australia’s national housing prices have averaged an 8 per cent growth over the past five years, buffering the economy as the nation transitioned from the mining boom.
The fall in building approvals and easing in house prices will have ramifications for the economy, according to AMP economist Diana Mousina.
"Over the past few years, the strong gains in home prices have allowed households to draw down on savings, which has been positive for consumption.”
"But looking ahead, the savings ratio is unlikely to move significantly lower, which is a constraint for consumer spending," Mousina added.
"A weakening consumer is a large downside risk for the Australian economy."
Related reading: HSBC Cuts Forecast for Sydney and Melbourne Housing Prices
The Housing Industry Association were more positive, pointing out that performance of new detached houses remained strong.
“The volume of approvals for new detached houses is at its strongest in 15 years,” HIA senior economist Shane Garrett said.
“Strong demand for new houses is being sustained by healthy rates of population growth – itself a product of robust labour markets in Australia’s largest cities.”
The ACT saw the largest expansion in new dwelling approvals during April 2018 with an increase of 39.2 per cent compared with a year earlier. Over the same period, approvals grew in Victoria (+25.8 per cent), Tasmania (+15.2 per cent) and South Australia (+1.9 per cent).
Building approvals fell in four markets over the year to April: Queensland (-11.5 per cent), the NT (-6.6 per cent), NSW (-5.4 per cent) and WA (-3.0 per cent).
Figures this month from the ABS show that Australia’s construction sector is steadying with the value of construction work in the March quarter rising by just 0.2 per cent, missing forecasts of a 1.3 per cent gain.
The value of residential construction took a dive over the year, dropping 1.3 per cent while engineering and non-residential construction picked up the slack with 10.3 and 5.4 per cent increases respectively.
