Australia: Dwelling approvals dip but mix promising – Westpac

Matthew Hassan, analyst at Westpac, notes that Australia’s dwelling approvals declined 1.2% in June following a slight 0.3% rise in May (pared back from a 0.7% gain).

Key Quotes

“The result was in line with Westpac’s view but slightly below consensus expectations of a 0.2% gain. Approvals slumped 30% over 2018 and are still down 25.6%yr.”

“The June detail was also in line with our view with a sharp retracement in high rise approvals, down an estimated 19% in the month following an 11% gain over Apr-May.”

“The total value of non res building approvals jumped 9.6% following a 6.8% decline in May. Despite the volatility, approvals look to be maintaining a solid rising trend. The detail shows recent rises have come across a range of sub-segments including education, health, retail and warehouses.”

“Overall the June update was largely as expected, dwelling approvals still soft but around what is likely to be a stabilising trend that emerges more clearly over the second half of 2019.”

“Further weakness in new dwelling construction remains locked in for 2019 and the first half of 2020, with any stabilisation likely to be slow to play through to activity due to the long lags on high rise projects.”