Approvals Boosted By Apartments, Private Houses Struggling

Headline building approvals for December rose a much stronger than expected 18.5% m/m after declining 8.8% the previous month. However, the result was driven by the highly volatile apartment sector whereas private house approvals fell for the fourth consecutive month. While monetary tightening and rising costs were expected to slow the sector, the RBA is likely to be monitoring it closely for the degree of the correction.

• The number of approvals for private houses fell 2.3% m/m after -2.5% in November to be down 11.7% y/y after -12.7%. 3-month momentum remains extremely weak at -26.9% annualised. New home sales fell 48.6% y/y in December, as higher rates and inflation weigh on demand for new homes (see Housing Correction Remains Orderly For Now).
• Private apartment approvals soared 58.8% m/m to be up 2.9% y/y. This followed three straight contractions. The ABS noted that the result was driven by the approval of some large apartment developments in NSW and Victoria.
• Public dwelling approvals jumped another outsized 69.3% m/m after 85.5% in November and are now up 137.1% y/y.
• The value of total residential building rose 6.6% m/m whereas non-residential building fell 1.7%.
• The NAB Q4 business confidence survey was also released and posted a decline to -0.7 from +8.6 in Q3, the lowest since the Covid-impacted Q3 2021, with current conditions falling to 18 from 23.2.

Source: MNI - Market News/ABS