Australia: Jump in dwelling approvals in November – Westpac

Matthew Hassan, analyst at Westpac, points out that Australia’s dwelling approvals recorded a much stronger than expected 11.8% gain in Nov, more than recovering from the sharp 7.9% fall in Oct.

Key Quotes

“The Consensus had been looking for a 2% rise. Total approvals are down 3.8%yr but are up on 3.3%qtr on a rolling 3mth basis, the first positive since Apr. While that is broadly consistent with the improvement in the wider housing market since mid 2019, the choppy profile to monthly approvals and survey detail suggests any underlying improvement is still only tentative.”

“Much of the monthly volatility relates to the high rise segment where large projects produce bigger month to month volatility and make seasonal adjustment difficult. For Nov, this segment recorded a big lift, up about 35% in seasonally adjusted terms but coming off double digit swings in the previous months.”

“Non high rise approvals posted a more muted but still strong 6% gain in Nov, following a 5% drop in Oct, the segment showing higher than normal volatility in recent months.”

“The state detail showed the monthly gain was heavily concentrated in NSW where high rise approvals more than tripled in the month, driving a 52.8% spike overall.”

“The total value of renovation approvals recorded a sharp 5.3% drop to be down 6.9%yr and in a renewed downtrend. The total value of non res building approvals fell 20.7% to be down over 20%yr.”

“Overall the Nov update pares back some of the downside risks that were emerging in previous months, although in our view it stops well short of indicating the beginning of a sustained rise.”