New unit approvals up 35% in August: ABS

Construction of apartments looks set to pick up over spring following a big jump in non-house dwelling approvals in August, according to ABS estimates.

The seasonally adjusted estimate for private sector dwelling approvals excluding houses rose 35.1% to 5,829 dwellings in August following a rise of 0.4% in July.

The biggest increase occurred in NSW, with unit approvals up 45% over August, with a 19% increase in Queensland and a 17% rise in Tasmania.

There were smaller increases in Victoria (7%) and WA (5%).

Westpac says dwelling approvals were much stronger than expected in August "but are dominated by what are likely to be temporary boosts".

"Outside of these influences, conditions remain decidedly soft," the bank says.

It cautioned against reading too much into the "very sharp" spike in units saying this segment is "often very volatile as it includes large, 'lumpy' multi-unit high rise developments".

"Although the August rise was 'shared' across NSW, Victoria and Queensland, by far and away the biggest spike was in NSW where unit approvals more than doubled month-to-month to the highest reading since January 2003.

"Digging down into the detail, the rise was driven by 'high rise' apartments which saw an extraordinary 1,890 dwellings approved - the biggest reading since 2002."

"This is more than likely to be due to several very large projects passing approvals and as such is not a strong guide to underlying momentum, although these approvals will clearly still feed into actual building activity," the bank says.

The Housing Industry Association (HIA) described the August result as "solid" but expressed concern at continual slide of the "core detached housing sector" which is down 4.4% for the three months to August 2011.

According to HIA senior economist Andrew Harvey, this reflects the fact that"interest rates are too high and consumers are increasingly cautious given volatility in the global economy and weakness in the non-resource domestic economy".

With the $10,000 building boost for new houses kicking off in Queensland on August 1, private sector housing approvals increased by 16% over the month.

However, overall private sector new house approvals fell 1% in August 2011 to 7,547 houses, following a rise of 0.2% in the previous month.

Overall, dwelling approvals were up 11.4% on a seasonally adjusted basis following a rise of 1.8% in July.

The seasonally adjusted estimate for the value of total residential building rose 10.8% and the value of non-residential building rose 20.3%.

Overall, the value of total building approved rose 14.2% in August following a fall of 4.1% in July.