Building Approvals Continue To Weaken

Building approvals in October fell 6% m/m after a downwardly revised drop of 8.1% in September, while private housing also fell the real weakness was the volatile apartments sector. Building approvals are down 6.4% y/y, but growth appears to be improving and 3-month momentum stabilising in positive territory. Q3 construction activity rose a stronger than expected 2.2% q/q (Q2 -2%).

• There doesn’t seem to have been a large impact on building approvals yet from the 200bp of monetary tightening seen this year, and the October decline was not uniform across states. It is worth noting that activity in the sector began declining before rates increased in 2021 as it began to face labour and material shortages.
• Approvals for private houses fell a further 2.2% m/m after -8.5% last month bringing the annual rate to -11.3%, which is off of its low in March 2022. Private non-house approvals (apartments) fell 11.3% m/m after -6.9%. Public sector approvals were down sharply for the second consecutive month at -16.2% after -26.1%.
• The value of residential building approvals fell 2.1% m/m.

Source: MNI - Market News/ABS