Dwelling approvals "lose momentum" with surprise fall of 5.5% in March led by NSW and Victoria: ABS

Approvals to build new houses and apartments fell 5.5% in March in seasonally-adjusted terms and 1.2% in trend terms.

Trend falls of 3.7% and 3.6%  were recorded in NSW and Victoria respectively, according to the ABS, which highlighted the trend figures as being less volatile than seasonally-adjusted numbers.

The fall in NSW approvals will be noted given the state has been incentivising the purchase of new homes with its $15,000 first-home buyer (FHB) grant since October 1 last year.

Victoria will introduce its $10,000 FHB for new homes only from July 1.

Private sector house approvals were up 0.4% to 7,586 dwellings with the more volatile unit approvals down 8.3% to 4,859 dwellings.

In trend terms approvals were down 1.2% with private sector house approvals up 0.2% and unit approvals down 3.1%.

The number of dwellings approved have fallen in the first 3 months of 2013, in trend terms, following a period of growth throughout 2012.

Westpac commented that dwelling approvals "continue to make a disconcertingly soft start to 2013" with the fall in March fall "against expectations of a modest 1.5% gain and suggests the recovery apparent through much 2012 has lost momentum".

Westpac notes the volatile nature of unit approvals, but estimates that 'low to mid rise units', which is less volatile than the 'high rise' sub-segment, has seen five consecutive monthly declines in approvals.

"That suggests the March decline is not simply due to volatility but reflects a broader loss of momentum."

The ABS dwelling approvals also decreased in March in Tasmania (-3.5%) but increased in Queensland (2.4%) which also has a $15,000 FHB new home grant, Western Australia (0.7%) and South Australia (0.2%) in trend terms.

Dwelling approval trends have been rising for over a year in Western Australia (14 months) while falling for the last year (12 months) in Tasmania.

In trend terms, approvals for private sector houses rose 0.2% in March, having been essentially stable since September last year.

Private sector house approvals rose in Western Australia (2.3%) and New South Wales (0.6%).

In New South Wales the trend has been rising since March last year (12 months).

Private sector house approvals trends fell in Victoria (-0.9%), South Australia (-0.7%) and Queensland (-0.7%). Only Queensland has maintained a fall over the last year (13 months).

The trend value of total building approved rose modestly (0.1%) in March and has now risen for 14 months. The value of residential building fell 2.4% while non-residential building rose 3.6%.

The ABS says it focuses on movements in the trend "as seasonally adjusted month to month movements can be highly volatile and are not necessarily indicative of the underlying strength in approvals data":.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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