Building approvals disappoint with unexpected 6.9% fall in June

Building approvals for new houses and apartments fell 6.9% over June to 12,778 units on a seasonally adjusted basis according to the ABS - well below market expectations.

It follows a 1.1% fall in May, but a 9.1% rise in April.

ANZ had forecast a 4% monthly rise over June with the market tipping a more modest 2.5% gain.

"Low interest rates, strong population growth and pent-up demand are supporting a strengthening in housing activity in Australia and we expect this to continue," said ANZ ahead of the June numbers.

Approvals for private sector houses fell 1.2% over June to 7,926 dwellings, though still up 9.9% on figures from a year ago.

Approvals for private sector apartments - the more volatile of the two building sectors - fell 12.6% over June to 4,543 dwellings and down 37.4% compared with a year ago.

Despite the monthly fall, private sector house approvals are still trending up while unit approvals have flatlined:

Dwelling approvals increased in June in the Australian Capital Territory (2.7%), Western Australia (1.8%), New South Wales (1%), Tasmania (0.9%), South Australia (0.8%) and Queensland (0.1%) but decreased in the Northern Territory (-10.9%) and Victoria (-1.2%) in trend terms.

In trend terms, approvals for private sector houses increased for the six consecutive month in June.

Of the states and territories, South Australia (2.6%), Western Australia (1.5%), New South Wales (1%) Victoria (0.9%) and Queensland (0.6%) all experienced rises in private sector house approvals.