House development decline drives approval downfall

According to the Australian Bureau of Statistics, the number of total dwelling approvals fell by 1.5 per cent over the month to reach 15,487. 

This fall was at its strongest with housing across Australia, with the data stating that the 9,808 approvals recorded were 50 bps smaller than in April. 

However, seasonally adjusted, this figure reached a fall of 2.5 per cent. 

Dwellings beyond housing, including apartments and town houses, also fell by 2.5 per cent month-on-month to reach 5,304. Yet, seasonally adjusted, this increased to a 32 per cent lift over the same period. 

Total dwellings were recorded as increasing by 9.9 per cent over May with seasonally adjusted figures. 

The monthly change was seen at its strongest in NSW, which saw house approvals fall by 2.3 per cent to reach 2,317, and other dwelling approvals fall by 2.2 per cent to reach 4,171. 

By contrast, Queensland reported the highest growth over the same period – lifting by 2 per cent and 80 bps respectively. 

These latest results reflected a more consistent trend following recent waves of ebbing and flowing. 

In January, figures were reported to be at their lowest in 18 months. The following month saw confirmed constructions rising by 43.5 per cent before dipping during March, collapsing by almost one-fifth (18.5 per cent). 

In April, this trend of loss continued onwards from March, dropping by 2.4 per cent in approved residential buildings. 

However, while these latest May figures reflected some reprieve with its seasonal adjustments, the number of approved dwellings remains drastically low compared to what was reported 12 months earlier.

According to ABS’ latest figures, the number of total approved dwellings for construction has fallen 23.4 per cent in the 12 months to May 2022. 

When seasonally adjusted, this figure is still notably high at -20.9 per cent. 

The fall was at its strongest with houses, which fell by 25.3 per cent year-on-year and 29.5 seasonally adjusted for the same period.

Other dwelling approvals were reported as falling 21.9 per cent over the 12-month period, which eventually lifted to a 5.4 per cent loss when seasonally adjusted. 

The results acted as further confirmation of the loss of momentum within Australia’s property market. 

Earlier this month, PropTrack released figures that suggested the market has recorded its “sharpest slowdown” in more than 30 years. 

Data released by CoreLogic last week also stated that clearance rates in Australia are at their lowest in more than two years.

Further, a report released by SQM Research earlier this month also reported that distressed listings grew over June and are expected to continue upwards to eventually reach pre-pandemic levels. 

[Related: RBA’s faster rate rises to accelerate housing decline: ANZ]