Australia: Dwelling approvals above expectations in September - Westpac

Matthew Hassan, Research Analyst at Westpac, notes that Australia’s Sep dwelling approvals came in above expectations with total approvals up 1.5% in the month vs consensus forecasts for a 1% decline.

Key Quotes

“While the miss was not big in the scheme of things – approvals often jump around 5-10% month to month – the detail ran contra to expectations in nearly every respect.”

“We had been looking for some softening in non high rise approvals which had been firming over the last 4mths, and for further weakness in high rise.”

“Instead the detail suggests non high rise posted another modest gain while high rise recorded a jump (we estimate up over 20% in seasonally adjusted terms).”

“The latter is almost certainly a by-product of large project ‘lumpiness’ rather than pointer to renewed vigour in this segment. Notably the state detail showed a surprisingly strong month for high rise approvals in NSW – the state that has seen the most abrupt slowdown across the wider residential market over the last 6mths and where lead indicators such as site sales are clearly pointing to high rise activity taking a another leg lower over the next 12mths.”

“Across the other states, approvals in Vic and Qld were softer, the latter compounded by a further heavy decline in high rise. WA and SA both recorded solid gains although for WA this was all due to a jump in high rise.”

“Overall we suspect the firmer than expected data this month is a bit of a head fake and that approvals will show a clearer softening trend into year end.”