Multi-units drive approvals lower in May 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 per cent in multi-unit approvals, with detached house approvals inching up by 0.2 per cent 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,” remarked HIA Senior Economist, Shane Garrett.
“Interestingly, the RBA cut interest rates during May and today’s result indicate that this move may have helped contribute to steadier conditions for detached house approvals.
“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.
“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,” concluded Mr Garrett.
During May 2016, total seasonally adjusted new home building approvals rose in Victoria (+3.1 per cent) with a slight increase also occurring in Tasmania (+0.1 per cent). New dwelling approvals saw the largest reductions in Western Australia (-20.0 per cent), Queensland (-17.6 per cent) and South Australia (-13.0 per cent) with a fall also occurring in New South Wales (-6.9 per cent). In trend terms, approvals rose by 18.7 per cent in the Northern Territory and by 8.2 per cent in the Australian Capital Territory.
Main image copyright: <a href='http://www.123rf.com/profile_humannet'>humannet / 123RF Stock Photo</a>