9 Consecutive Falls in Building Approvals

Residential dwelling approvals have recorded 9 months of consecutive falls on the prior corresponding period with the March figures showing no signs of relief to the downturn. Whilst the level of approvals for detached housing is down just -4.2% over the past 12 month period, compared to the previous 12 months, the March figure is down -17%. For Apartments, the change has been more significant with March down -40% and with an annual decline of -23% against the previous 12 months. As we have previously reported, such significant movements in apartment approvals reflect the limited appetite developers across the country have to secure approvals given the increased risks they have in maintaining end values, securing funding and meeting pre-sale conditions. The combined data for the Capital Cities Apartment Approvals reveals that apartment approvals for the 12 months to March 2019 are down 21,636 to 70,589, or -23% on the prior corresponding 12 month period to March 2018. What looked to be a reprieve in the decline for Sydney and Melbourne Apartment Approvals last month, the trend has been short lived with Sydney down -33% in March and Melbourne down -58%. The annual decline in these markets continues to be significant with Sydney down -22% and Melbourne down -30%. Brisbane apartment approvals dipped again in March down -41% on last March with only 591 units approved in the month. Brisbane annual apartment approvals continues to see the greatest annual decline, down -32% on the previous 12 months. Housing approvals are generally less volatile, however the declines in March continue to show a significant slowing. Sydney and Melbourne detached housing approvals fell -18% and -24% respectively bringing their annual growth rates to -3.6% and -4.6%. Brisbane detached housing approvals are also down -16% on last year to record an annual change of -6.7%, whilst Perth is down -6.2% annually. Whilst in the short term, the reduced supply will allow excess stock to be absorbed quickly and reduce construction pricing the economic multiplier from the sector will state to impact consumer consumption and overall economic activity.