Australian building approvals for July 2010 – momentum to the upside

Posted on 01 September 2010

Australian building approvals data for July released by the ABS yesterday (here).

ABS Building Approvals show that the total number of dwellings approved rose in July 2010 following falls in the previous three months in seasonally adjusted terms. According to the ABS, New South Wales (9.7%), Victoria (12.1%), South Australia (8.3%) and Tasmania (4.4%) recorded more dwelling approvals this month, while Queensland (-18.3%) and Western Australia (-4.9%) recorded less dwelling approvals in seasonally adjusted terms.

Our approach is to remove the seasonality bias by reviewing data on a 12 month rolling basis. In this context, building approvals for new dwellings continued to rise in July but look to be peaking as the rate of expansion slows:

This is consistent with recent home lending data (here) and the liklihood that the demand/supply situation looks to be broadly in balance around ~170,000 new dwellings per annum (see here for background):

One further development that is notable is the changing nature of new dwellings. The following chart maps the ratio on new houses to new units across the last 30 years. We can clearly see the distorting effect of the recent first home buyers assistance:

Couple high house price to income levels with the baby boomers vacating their nests over the coming years, and think we can expect this ratio to plum new depths.

« Previous Entry

Australian unemployment –

Australian July credit – last true believer buys another house