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Matthew Hassan, Research Analyst at Westpac, notes that Australia’s dwelling approvals bounced 6.4% in June, coming in well above expectations with the consensus forecast a 1% gain.

Key Quotes

“The detail confirmed May’s 2.5% decline was likely a data issue with Qld approvals rebounding from their extreme fall.”

“Outside of this, the picture is more mixed but is clearly not showing the anticipated weakening, particularly across high rise which recorded another relatively strong month.”

“Other housing market indicators have shown a clear softening in recent months.”

“Meanwhile the daily price data indicates that the monthly CoreLogic update due out tomorrow will likely show a 0.6% decline in prices nationally for July with the pace of decline quickening, particularly in Melbourne. That raises the likelihood of a renewed slowdown in building activity, particularly given a tighter funding environment.  However, the continued resilience in dwelling approvals means the effect of a renewed slowdown on construction and economic activity will come through later in the piece, i.e. 2019 and beyond.”