June dwelling approvals down 1.2 percent: Matthew Hassan

EXPERT OBSERVER

Dwelling approvals declined 1.2% in June following a slight 0.3% rise in May (pared back from a 0.7% gain).

The result was in line with Westpac's view but slightly below consensus expectations of a 0.2% gain.

The detail was also in line with our view with a sharp retracement in high rise approvals, down an estimated 19% in the month following an 11% gain over Apr-May.

Non high rise approvals posted a small gain in the month, detached house approvals up 0.4% and 'low-mid' rise unit approvals up an estimated 0.9%.

We had been looking for high rise to drop back and non high rise to show signs of stabilising.

The state detail showed sharp declines in NSW and WA but a surprise rise in Vic (+9.7%mth). This is almost certainly due to a lumpy high rise project and suggests there may be a further let down in this segment to come.

Overall the update was as expected, dwelling approvals still soft but around what is likely to be a stabilising trend that emerges more clearly over the second half of 2019.

Further weakness in new dwelling construction remains locked in for 2019 and the first half of 2020, with any stabilisation in approvals likely to be slow to play through to activity due to the long lags on high rise projects.

MATTHEW HASSAN is a Senior Economist for Westpac.