In a disappointing sign for the building and construction industry, seasonally adjusted building approvals throughout Australia dropped back in March, registering the sharpest monthly fall in eight months.
On a seasonally adjusted basis, the number of dwelling units approved for construction throughout Australia contracted 5.5 per cent – the steepest rate of decline since July last year.
To be sure, the drop is somewhat misleading as it was caused entirely by an 8.3 per cent fall in the multi-residential sector, which typically experiences significant monthly volatility. Approvals in the more stable stand-alone private sector houses segment actually edged up 0.4 per cent.
Furthermore, as Housing Industry Association senior economist Shane Garrett notes, approvals for the first quarter of this year are up 8.8 per cent compared to the same time last year.
Moreover, more encouraging data continues to flow through. Sales of new homes, for instance, registered their second highest level more than a year in March, and have risen for five of the past six months, implying an underlying upturn in the pace at which new work is coming in.
In contrast to home sales, however, seasonally adjusted approvals have declined for five of the past six months, a fact building industry economists worry illustrates the fragility of the market at a time when the government may be tempted to cut back on building and infrastructure investment amid a tight federal budget.
“A tentative recovery does appear to be underway but it remains delicate,” Garrett says.
“Every positive indicator on housing seems to be quickly followed by negative data in relation to other aspects of the market.”
In terms of states, South Australia led the decline with approvals plummeting 23.5 per cent followed by New South Wales (10.9 per cent), Victoria (9.3 per cent) and Tasmania (0.3 per cent).
By contrast, approvals jumped 13.3 per cent in Queensland and edged up 0.6 per cent in Western Australia.